Legal Question in Real Estate Law in California

Re: cancelling sale

I do not know what you mean by a demand. The problem you have is that your broker represents you, so under normal contract law if you have agreed to purchase something where the seller has not made any misrepresentations or was aware of any, you often are still stuck with the agreement. If there is a substantial difference, such as you thought it was 1,200 sq. feet in size and it is only 600, then you might be able to get out of the contract under the Ship Peerless principle that the buyer and seller are looking at two different things [two different ships both named Peerless] so no meeting of the minds occurred.

What the seller is probably doing is making a written demand on you to go through with the terms of the contract and if you do not the seller will argue that they are entitled to whatever damages are specified in the contract or are otherwise collectible.

You have not told us what the misrepresentation was, so none of us can predict what might happen. Perhaps the broker can make up for it by paying part of their commission or the seller would be willing to make minor changes in the contract instead of having to go through the process of re-selling the property. Immediately tell the seller whta the problem is, find out from yuor broker what remedies they ar willing to provide, remember that you can go to the Department of Real Estate to complain [may not be much help] or to the owner of the real estate company.

Good luck.

Re: cancelling sale

The "demand" is a standard real estate form, frequently used (and sometimes required) to remind the other party that a performance is due, such as depositing funds into escrow, delivery of a deed, removal of a contingency, etc. Your broker should know all about them and should have given you an explanation.

Whereas buyers can usually compel specific performance by a seller that refuses to go through with a deal, the seller rarely can force the buyer to perform.

When a buyer fails to close the deal, the issues will be whether the deal can be rescinded for cause by the buyer, or whether it is a matter of breach of contract by the buyer, and the remedy is money damages flowing from the party primarily at fault to the injured and more innocent party.

A buyer's broker owes a very high standard of fiduciary duty to his or her client. In your particular case, if your broker made material representations to you, what will probably happen (unless there is a negotiated settlement) is a suit by you naming the broker as defendant, and probably necessarily joining the seller as a party in some capacity, so the court will have jurisdiction over all three of you can can adjudicate everyone's rights and claims.

I think the starting point for you is to see a local real-estate lawyer to discuss whether the broker's misrepresentation was material and whether it violated the duties owed by a buyer's broker to the client. Then, have the attorney make a demand on the broker, probably copying the seller, although how to deal with the seller at this point is a strategic decision that should be made by your lawyer after learing all the facts. (The seller may be equally or even more liable, or may be an innocent victim).

The hope is that the matter can be cleared up before litigation costs are incurred, and you can find a better broker and a suitable condo.

By the way, I should add that many real property sales contracts contain mediation or arbitration clauses and attorney-fee provisions. When you discuss strategy with an attorney, be sure to cover these aspects as to both the purchase agreement and your representation agreement with the broker.