Legal Question in Real Estate Law in California

If there was an Oral Agreemen that was sufficiently specifict, the buyers changing position by getting a loan, can create a contract, but generally the rule requiring written contracts for real property would prevent there from being a contract here.

Mr. Selik's answer is mostly but not quite exactly right. Due to the strict requirement in California that contracts to sell real property must be in writing, the prospective buyer cannot sue you for breach of the contract, even if there was an oral agreement that he relied on in paying for a loan lock. In addition, due to the requirement of a written contract, he cannot claim an executory contract was formed by a verbal agreement and partial performance. At most he could sue you for misrepresentation or fraud if he can show you promised him to sell him the house without ever intending to do so, and he relied on it in paying the loan lock charges. I would, however, seriously question whether he is telling you the truth about the loan lock. I know of no lender who will go so far as giving a loan lock without a signed written contract for sale.

I agree with Mr. McCormick. I find it hard to believe that an institutional lender would give a loan lock without seeing a written purchase and sale contract on a standard CAR (California Association of Realtors) form.