Legal Question in Real Estate Law in California

Buyer reneges on purchase of home
I am a real estate licensee representing the seller. The seller accepted a purchase contract and Liquidated damaeges and arbitration of dispute secttions initialed by buyers and sellers. Purchase contract states buyers to put down 20% with a first mortgage for the other 80% and escrow to close within 35 of acceptance per contract. Nine days before scheduled close of escrow date, buyers decide without permission of seller to go with 100% financing. The following day, buyers decide they no longer wish to purchase property and demand their deposit back. Buyers had already removed ALL contingencies on day 14 of escrow. Seller had agreed, though relectantly, to proceed with the contract with 100% financing. Buyers agent understands that buyers will most likely forfeit all of their deposit if this goes to arbitration. Should this go to arbitration and it can be prooved that buyers acted in bad faith, i.e. deceiving sellers by stating a 20% down payment and then changing their financing to 100% and then reneging on the purchase of the property long after all contingencies were reoved, can the buyers also be liable for court costs? The buyers agent is trying to intimidate sellers by saying arbitration can drag on for months.

Asked on 7/30/04, 12:44 am

3 Answers from Attorneys

Ken Koenen Koenen & Tokunaga, P.C.

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Re: Buyer reneges on purchase of home

Yes, arbitration (actually most contracts require mediation first) can take some time. On the other hand, the loosing party will be required to pay the legal fees, including arbitration costs.

A buyer has the right to get whatever financing they want, but they are required to abide by the contract that was written unless the sellers agreed in writing to change the terms.

You may be able to sell the house without distributing the funds. This is a material breach of contract by the buyers, absent other information. I would need to review all contracts and correspondence to give you a better answer.

Answered on 7/30/04, 12:00 pm

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Joel Selik www.SelikLaw.com

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Re: Buyer reneges on purchase of home

Yes, (assuming standard contract) and attorney fees. Make sure the contact is complied with for mediaiton/arbitration etc.

JOEL SELIK

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Answered on 7/30/04, 4:34 pm

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