Legal Question in Real Estate Law in California

Earnest Money Deposit

I was going to purchase a home in AZ and gave the builder a 10,000 earnest deposit. Beyond my control I could not close when the house was finished.

They have sold the home for more than my contract, so I don't think they have damages, but the contract says they can keep the deposit as liquidated damages.

Are there any CA laws that can help me, or am I screwed?


Asked on 4/11/06, 9:47 pm

3 Answers from Attorneys
JOHN GUERRINI THE GUERRINI LAW FIRM - COLLECTION LAWYERS

Re: Earnest Money Deposit

If the contract is governed by Arizona law, then you need to ask an attorney familiar with Arizona law for the answer to your question.

In California, liquidated damage provisions are enforceable if they meet certain criteria, the most signifant one being that the provision is a reasonable estimate of the damages that the parties agree would be suffered by the non-breaching party in the event of a breach. In the real estate purchase context, liquidated damages are extremely commonplace.

Based upon the facts you presented, if you were not able to go through with the closing as a result of your issues (whatever they were), and it was not the fault of the seller, then you are likely out of luck.

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Answered on 4/12/06, 8:42 am
Ken Koenen Koenen & Tokunaga, P.C.

Re: Earnest Money Deposit

You are most likely under the control of Arizona laws.

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Answered on 4/12/06, 11:34 am
OCEAN BEACH ASSOCIATES OCEAN BEACH ASSOCIATES

Re: Earnest Money Deposit

Where was the contract signed? Did you mail the check or transfer the funds from California? Did you understand what liquidated damages were? Did you feel that the ibargaining position with you and the construction company was equal? Call me directly at 16192223504.

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Answered on 4/12/06, 1:29 pm


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