Legal Question in Real Estate Law in California

Re: California Residential Purchase Agreement

A residential purchase agreement is a contract. Usually, both parties to a valid contract are bound by it and each has the same rights and remedies for breach. So, when you use the term "cancel," just as when tenants talk about "breaking" their lease, what is really involved is breach of contract.

Now, it is true that SOME contracts carry a statutory right of rescission. One example is many real-property loan contracts having a three-day cooling off period. That's not the case with most contracts, including RPAs.

It is also true that buyers and sellers of residential real property have different remedies available. A buyer can often compel the seller to complete the deal by asking for the remedy of "specific performance." A seller can rarely if ever compel a buyer to buy; the seller's usual remedy is money damages, frequently in the form of forfeiture of the deposit, up to 3%.

So, if the buyers are really intent on forcing you to go through with the deal, they will file a suit for specific performance, and might win. Probably will win, unless you have a defense. They would have to show preparedness to pay the purchase price in order to win.

In deciding what to do, look at your RPA and see what boxes are checked and what the parties initialed in the sections dealing with mediation, arbitration and attorney fees. If you have agreed to an attorney fee clause, you could not only be forced to sell, but you'd be paying the other side's lawyer out of the proceeds of sale.

In some cases, it might be better to negotiate your way out of the deal and pay a small fee for them to cancel and walk away.

Re: California Residential Purchase Agreement

Just one quick add-on to Bryan's thorough answer, and that is that in most RPAs, there are contingencies which allow (mostly the buyer) to cancel in the event certain things happen or do not happen. The answer to your question is entirely specific to the facts surrounding the matter, and to the exact language of the contract between the buyer and seller. You need to have an attorney review the contract to determine if there is a legitimate basis for termination.

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