Legal Question in Real Estate Law in California
My inlaws are in the process of selling their home. Escrow began in February with a March 4th close date. After two delays, they were left with only 1 week to vacate their home. Their agent and the buyer's agent told them they had to be out by the 4th or pay rent. They requested an extension for their moving out and did not receive anything in writing until after the 4th. After the 4th they received paperwork that said they could remain in the house rent-free until the 15th. They were moved out by the 4th since they did not get anything in writing beforehand. As of the 15th, however, escrow is still open with no definate close date because the lender is requiring more of a downpayment from the buyer. The house is vacant but my inlaws still have all of the utilities turned on and are now being contacted by their mortgage lender for their payment. At this point, who is responsible for the house payment, the utilities, their new rent and storage costs, the cost of keeping the utilities turned on so the grass won't die, et cetera. Escrow was originally scheduled to close on 3/4/10 and no one will tell them when or if it is going to close even by the end of this month.
3 Answers from Attorneys
Until escrow closes, your inlaws are responsible for it all. Their agent is doing a really bad job of protecting their interests. If escrow has not closed through no fault of theirs, they need to make a demand for performance and if it is not mett cancel the contract and either keep the deposit as liquidated damages, if that is what the contract calls for, or sue for their actual damages from failure to close. In the alternative their agent should give the buyers an opportunity to extend the close, but only by paying all your in law's expenses, including their mortgage payment.
I do not think there is an absolutely correct answer but they have a good argument to make that the buyers are responsible. Assuming that they tried but received no oral response to their request to extend the date beyond 3/4, they can argue that they moved out in compliance with the terms of the escrow and sales contract and the orders of the buyer's agent tha tthey had to be out by 3/4. they fulfilled their obligation and buyers are in breach by not closing yet. Since buyers required them to pay rent if they stayed beyond 3/4, that implies that buyers considered the hoouse their house after 3/4 so they are responsible for all the expenses from that date on. Since ther is no guarantee that the sale wio go through, it is reasonable to pay the utilities now and get reimbursement later. Escrow should be told that those expenses should be added onto the sales price less credit for any amounts paid by the buyers. I would suggest not runnning the risk of damaging their credit record and incurring penalties by not paying the monthly mortgage. The argreement to extend the close ofescrowwasmade after the breach and they can agree not to enforce the breach if the buyer accepts additional terms to cure the damages from the breach. Afterall, the buyers wanted them to pay rent of $100 per day if they stayed later than 3/4 so why should the opposite not apply when the buyer's extend the move in date?
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If there was no close of escrow, there was no need for them to vacate the property. If their agent told then they had to move before escrow closed, there is a posibility that the agent and his broker could have some liability.
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