Legal Question in Real Estate Law in California

We are in the process of selling our home and our buyers cancelled the contract stating that it was due to the inspection. However, they did not even try to negotiate with us and we still don't know what the issues/concerns were. We have then learned that they were in negotiations on another house during this time and have opened escrow. Who is entitled to the $5000 good faith deposit that they put down. They are asking for it back, but we do not feel that they negotiated with us in good faith.


Asked on 2/05/11, 8:09 pm

1 Answer from Attorneys

You are the victim of a common tactic in the real estate industry, which is using the contingencies as a "get out of jail free" card. They are not. The problem is that for years, sellers could almost always find another buyer at or near, or even above the contract price, and it has never been worth it to fight about whether or not the buyer was acting in good faith. In addition, if you checked off that the prevailing party gets attorneys fees, the seller is at risk if a judge or arbitrator finds that refusal to withdraw the contingency WAS in good faith. So real estate agents and brokers have come to treat the contingencies as if they mean you don't really have a contract at all, until they are removed. It's up to you if you want to take on this fight, but it does sound like they are in breach of the implied covenant of good faith and fair dealing on this one.

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Answered on 2/07/11, 12:01 pm


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