Legal Question in Real Estate Law in California
Late escrow closing penalty
My commercial (4 units) went into escrow early April with a closing date of May 16 (buyers wanted 45 days). Since buyers said they will be living in 2 of the 4 units, they requested 2 units vacated by closing of escrow. To oblige, by May 16th, 2 units were vacant and available. However, escrow did not close and was now extended for another 45+ days (buyers had trouble with their home sale). Our agent spoke with their and we (sellers) signed to agree for them to pay per diem for rent loss as of May 16. Now we are July 15 and finally will be closing but seller agent says they refues to pay since May 1st and we have to accept per diem from July 1 thru July 15 only!! What should we do other than forego the 2 month rent loss that we went thru to oblige with their request? How does the law protect this issue?
1 Answer from Attorneys
Re: Late escrow closing penalty
If they agreed, in writing, to pay from May 1, 2005, they are in breach of contract. If they did not agree to that provision, your agent should have informed you that they would not sign that agreement. Also, you should not have agreed to extend the close of escrow for 45 days UNLESS they agreed to pay for the lost rent for the period of the extension, and this should have been something your agent insisted upon, in order to protect you; if your agent "dropped the ball", you may want to suggest that he or she pay the rent you were expecting out of their commission.
The bottom line is that IF they agreed, IN WRITING to pay, then you have a number of options: if both you and the buyers signed the arbitration/mediation clauses, then demand that they mediate and arbitrate. If you did not sign those clauses, then you can sue the buyers for the amount of the rent, and/or you can seek to cancel the escrow closure. Also, in considering your options, you might want to consider if you have any other buyers out there, whether you can get a greater price from other buyers, if the price these buyers are paying is fair market value, etc.
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