Legal Question in Real Estate Law in California

If the sellers have actually filed for bankruptcy protection, they have not "disappeared" in any practical sense. You are now dealing with the bankruptcy trustee and court. Direct contact with the debtors in bankruptcy is no longer necessary, and for the most part, is no longer legally permissible. However, keep in mind that a high percentage of filed bankrupties is dismissed before discharge due to failure of the debtors to file necessary schedules or for other procedural reasons. What you need to do is become involved in understanding and following the bankruptcy case, and either filing a claim or petitioning for relief from the automatic stay so the debtor(s) can sign the cancellation. You may need some limited assistance from a bankruptcy attorney to do the following: (1) verify that the sellers have filed BK; (2) verify that the BK case has not been dismissed for a failure to comply with the procedural requirements; and (3) seek the necessary relief to process the cancellation of escrow and the return of your deposit.

If the bankruptcy is truely pending, you should be able to get the trustee to disclaim any interest in the deposit, which should be enough for the title company to cancel the escrow.