Legal Question in Real Estate Law in California

Re: Realestate

As I understand it, you can sue for whatever your actual damages are, i.e. what you can prove in court. The 3% is a statutory limit on what are called "liquidated damages" - ones the parties agree to in advance and thus can be forfeited without benefit of trial. I think most contracts call for forfeiture of deposits already made, subject to a 3% maximum, although some may have different (lower) percentages and/or may require the parties to mediate or arbitrate a dispute (if there is one) before the liquidated damages kick in. It's a matter of reading the fine print in your contract. Your agent or broker should explain it to you, but I would recommend that you read it yourself also, to make sure you're getting the straight scoop.

I think the deposit should have been larger, but perhaps not until contingencies were released.

You would have more difficulty sueing the buyer's agent and broker than in sueing your own. The buyer's broker only owes you duties of candor and honesty (disclosure, etc.) while your own agent and broker owe you more substantial duties including exercise of skill, care and competence in representing your interests. All the same, even an excellent and hard-working agent or broker cannot assure you that a buyer won't have a change of heart. Your best shot may be to establish that the deposit was allowed to languish too long at the initial "earnest money" level too long and should have been increased sooner - but I'm not sure that was the case here.