Legal Question in Real Estate Law in California

Buyer's Deposit/Liquidated Damages

I'm a real estate agent representing the seller of a property whereby the buyer backed out less than a week prior to determined COE.

Liquidated damages is initialed. After a week of correspondence with buyer's agent (who is also the buyer's father), buyer faxed a letter seeking arbitration and asked for seller's cooperation as seller is envoking liquidated damages clause and buyer does not want to give up his deposit.

Buyer's reason for backing out is that he could not obtain a loan because property is on leased land. Land lease was fully disclosed in the MLS, HOA bylaws and premliminary title report (buyer signed and returned). Buyer also signed a home inspection waiver (his father/buyer's agent said he didn't need it because he knows what to look for). They had no request for repairs, so he doesn't have an out there. There were also no section I termite repairs.

Buyer's cancellation letter didn't arrive via fax until 5/21/02 and loan denial letter stating ''insufficient leasehold estate'' did not arrive until 5/23/02. Close of escrow was determined at 5/22/02.

What are the seller's options?


Asked on 5/26/02, 1:29 pm

1 Answer from Attorneys
Robert Mccoy Law Office Of Robert McCoy

Re: Buyer's Deposit/Liquidated Damages

You better respond to that request for arbitartion or you are going to be paying those liquidated damages. It amazes me how sellers and their agents never see this even though it is right in front of their faces. They actually think that because they did not deposit anything in escrow they are free from liability. They think WRONG.

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Answered on 5/27/02, 5:00 am


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