Legal Question in Real Estate Law in California
The buyers through agent signed a contract to buy my single family home. They asked for an extension to release all the contingencies, especially the loan contingency. My wife and I agreed. The buyers finally removed all the contingencies and increased the EMD from 5k to 10 k. The buyers� agent insisted on my agent and us to close the escrow even 2 weeks earlier due to urgent needs of the buyers to move in. My wife and I agreed and moved our entire house hold furniture, appliances, plates, silverware, etc. Since our move, we are facing daily hardship by having to sleep on the floor in a sleeping bag, take our laundry out to laundry mats, dine outside since we cannot cook, and not to have access to our all of our clothes. Our furniture is in another house about 150 miles away from our current house.
When my agent informed the buyer�s agent that we are ready to close the escrow, after a period of no response and keeping us in a state of suspense for two weeks, our agent found out that the buyers had NEVER obtained a loan. Therefore, we could not close the escrow. After my agent directly contacted the buyers loan officer and the underwriter, we learned that the buyers did a short sell of their house three years ago and they may not get a loan to buy a house at this time. During two months that my house was under contract with the buyers, my agent took its marketing off the market and did not show it to any more prospective buyers
I greatly appreciate if you please clarify what legal actions my wife and I are entitled to take against the buyers and their agent. We feel defrauded by the agent who despite the fact that the buyers never had a loan, removed the contingency and even pushed us into moving out of our house early.
1 Answer from Attorneys
No assessment of your case in a free Q&A forum like this can be relied on as legal advice, but based on the information you give and subject to the limitations of trying to evaluate a case based on three paragraphs and no actual investigation, it sounds pretty clear that you have a case against the buyers and probably their agent, although the case against the agent is less clear. The one weak point in what you describe is that removal of a loan contingency is not a representation that the loan has been obtained or will go through. All removal of the loan contingency does is change the contract from one that the buyer can cancel without being in breach of the contract if they don't get a loan, to one that they are in breach of if they don't close, regardless of why they can't close. In this case, however, you seem to have additional conduct and representations that could provide the basis for a fraud claim against the buyers' agent and buyers.
A big open question that can only be answered by reviewing your contract is whether you are obligated to mediate before taking other action and whether you are obligated to arbitrate rather than sue.
If you would like to explore your options further, I would be happy to talk to you. I have office facilities in San Jose, and practice in Santa Clara County regularly. Please feel free to contact me.
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