Legal Question in Real Estate Law in California
cancellation of escrow
We opened escrow on Oct.15, 2006. The mortgage company that was in charge of obtaining a loan for us was taking their sweet time so the seller requested that we cancel escrow. Upon contacting the mortgage company we were assured that everything was going on as planned and to just wait a bit. We understand the seller frustration but we had given notice to our landlord and had everything we owned packed and our 3 daughters were excited about the move, it was frutrating for all parties. The escrow office send us a monthly letter to get us to cancel escrow and agree that the seller keep our deposit, as per the seller's wishes. However, after a while we made the heart whrenching decisionto cancel with the provision that the escrow instructions were amended to show that our deposit will be released to us, the buyer. Well that was 3 weeks ago and the escrow agent just informed us that the seller has not signed yet and if they don't sign the money won't be released and will be released in 3 years to the state. Is this legal? California civil code 1057.3 says different . We don't have the resources to go to retain an attorney and we need our deposit to help withour daughters high school graduation expenses. Please help I don't know what t
1 Answer from Attorneys
Re: cancellation of escrow
Civil Code section 1057.3 does not say that funds in escrow must be returned to the would-be buyer when the deal collapses. It says the parties must "ensure" that the money is released from escrow and paid over to whomever is entitled to receive it under the contract. That could be you but it could also be the seller.
It is not the seller's fault that your mortgage company didn't perform. As I see it, the seller is probably entitled to keep your deposit, not exceeding 3% of the agreed price, as liquidated damages for your failure to close on time. You may, in turn, have a claim against the mortgage company for its failure to perform, but most of those outfits carefully avoid making any promises that could be enforced in court!
Did you have a financing contingency in your purchase agreement? If so, and unless you waived it, that might bail you out. Ask your broker.
If there is no financing contingency, it is possible your broker is liable to you for a breach of his/her professional responsibility to keep a client out of binds like this. Your did use a licensed real estate professional to represent you, of course?
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