Legal Question in Real Estate Law in California
I put my house up for sale 6+ months ago. Most people really loved our house after visiting, but we did not get a single offer until 2/06/2014, 2 days before realtor representation was to expire. The realtor represented both buyer and seller with our permission. We countered 2-3 times and negotiated a an acceptable deal and both parties signed the residential property purchase agreement. The buyer submitted a $28,000 check for good faith money into an escrow account.
This last Monday, 2-24-2014, we were verbally notified that the buyer wants to withdraw from the sale and get the $28,000 back. All contingencies have expired without any buyer action although their was a walk-through inspection on 2-20-2014 by the buyer and his "handyman" or "contractor". 2-3 minor findings were mentioned, but the contractor thought the house was in very good shape.
The realtor told my wife that we should simply close escrow and return the $28,000 based on this reasoning:
1) Buyer's mother had intended to live with them. Since she had just suffered a major stoke, she won't be able to live in a 3 story house. Therefore, they are entitled to a free withdrawal. Our retort to the realtor is that we sympathize, but the terms of the formalized purchase agreement has precedence especially since the mother is not a princpal to the purchase or even mentioned. The realtor said that if we went to court, we would lose because California is a consumer-friendly state and that the terms and conditions of the Agreement are not taken literally. We pointed out to the realtor that we expect his company to represent our interests and to know that we are the damaged party in this business transaction. To inform the buyer of his obligation to continue with the purchase or forfeit the $28,000. To put in writing the buyer's intentions and to make a case to justify his actions within 24 hours.
We are a married couple with the husband in his 9th year of Parkinson's diagnoses. We have always been 100% accountable for all our liabilities and obligations. If the law and justice prevail, we will also.
Will we need a lawyer? If yes, how soon? What are my chances?
2 Answers from Attorneys
You don't need a lawyer to represent you yet, but you do need to consult with one right away. Your question uses terms that indicate you don't really understand the legal technicalities of the situation you are in. For example you say the realtor said you should "close escrow" and return the deposit. An escrow "closes" when the transaction goes through, not when it is cancelled. More importantly, you say the contingencies "expired." Contingencies do not expire. They are either removed or they are not. If the time for removing them has passed and they have not been removed, the buyer can still pull out based on the contingency. The seller's only option is to issue a demand for removal or cancellation of the contract. If all the contingencies have actually been removed using the proper forms, then and only then are the buyers obligated to go through with the transaction. So it appears you really need to bring your paperwork to someone, have them go over it and discuss it with you, and tell you what your legal rights and obligations are based on a full understanding of the status and history of the transaction. Hopefully a consultation like that, which would only cost a few hundred dollars, tops, will be sufficient. But if the dispute escalates, you will also already have a lawyer to help instead of having to scramble to find one if things get ugly.
I agree with Mr. McCormick. I think your gut instinct is correct, that the real estate agent is trying to make both sides happy, and may not have your best interest in mind. You do, however, mix up some legal terms. The significant issue that I see is whether or not the request to cancel is due to a failure to meet a contingency, which would not be grounds for a breach of contract. An attorney is going to have to review this transaction to properly advise you.
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