Legal Question in Real Estate Law in California

Re: right to cancel purchase agreement

You are asking us to interpret your contract which we haven't seen. Best guess is you will be in small claims court over the earnest money.

Re: right to cancel purchase agreement

Who's right in this situation depends a lot on the contract you signed. If the Buyer's acceptance of the condition of the home upon inspection is a condition of your purchase, and you have exercised your option to cancel within the correct time frame provided for in the contract, then you may be able to cancel without penalty. Further, the failure to disclose material conditions (such as non-functioning AC and furnace) may also be grounds for cancellation. It all depends upon the contract. Assuming you are in the right, and have a right to cancel, you're still not going to get your earnest money unless the Sellers agree to release it, or you get a court order. You need to review this and all of the facts surrounding it with an attorney.

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Re: right to cancel purchase agreement

I agree with the other answers. Your contract will be the most crucial document to determine your rights and the status of your right to cancel and your deposit.

If your contract was prepared on the standard California Association of Realtors form (RPA-CA), your cancellation rights as they relate to your opportunity to inspect and deposit are outlined in paragraphs 7, 9 and 14, to name a few.

Consider having an attorney review the document or agreement more thoroughly and retaining him or her to draft a letter to the seller. The couple hours of attorneys fees may be well worth the investment to avoid filing in small claims, assuming your deposit is significant i.e. at least a few thousand dollars or so.

Best of Luck!

Re: right to cancel purchase agreement

I'll add a couple more thoughts.

Your right to cancel and get a deposit refund may ultimately depend upon the materiality of the A/C and furnace defects. If the systems were totally shot you have a heckuva lot better chance than if the problem was only a blown fuse or loose wire on the thermostat.

Another item to consider is the dispute-resolution process called for by the checked boxes. Does the contract require mediation? Arbitration?

Finally, did the parties check the attorney fee box? When the loser has to pay the winner's legal costs, the risks change significantly and so does the strategy.