Legal Question in Real Estate Law in California

Seler backs out of contract-FSBO
We opened escrow on mutually agreed terms for a SFR 3 weeks ago, for sale by owner, no agents involved, escrow was opened, a deposit of $4000 was submitted from us (the buyers) to escrow and has been cashed and placed in the escrow trust account. This is the only agreement between buyer and seller, very standard terms, all pay own fees, etc.We signed the escrow inst and the seller had yet to submit his copy but had every intention to do so...he allowed me to have an appraiser complete his inspection, at my cost and I also retained a management company to rent my current residence. Escrow was to close 3/23/04. The seller called last night (3/9/04) and cancelled for ''personal reasons'', no explanation. What re-course do I have? If I had cancelled, would I have forfieted my deposit? Does that mean he must pay US the $4000 earnest money? Does it go both ways? I am out $700 for the management company & appraisal fee as well..

Asked on 3/10/04, 5:20 pm

3 Answers from Attorneys

Larry Rothman Larry Rothman & Associates

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Re: Seler backs out of contract-FSBO

You may have a right to specific performance if they signed a contract, but refused to sign the escrow instructions. Do you want the house? Please contact our office at 714 363 0220 if you want us to review your documentation and provide you with consultation.

Answered on 3/10/04, 5:28 pm

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Bryan Whipple Bryan R. R. Whipple, Attorney at Law

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Re: Seler backs out of contract-FSBO

You have two possible courses of action, each of which may have one or two subroutines.

First, if you want to buy the house on the original terms, sue the seller for specific performance. Faced with defending the suit, he might change his mind again and go through with the sale semi-voluntarily. Or, the matter might go to trial and you would have a very good chance of winning.

If you prefer to give up the house to avoid this kind of legal struggle, then go to the escrow officer in charge of your escrow and ask for return of your deposit. You'll probably be told they need some kind of indication from the seller that the sale contract is rescinded. Get that from the seller -- he should be willing to do this to avoid any further legal entanglements with you. Tell him you'll sue if he doesn't cooperate. Then, if he doesn't cooperate, sue him for the deposit in small claims. You should get a settlement well before the small claims trial. The key here however is to understand what the escrow holder needs in order to cancel the escrow and refund your deposit. Ask them.

Answered on 3/10/04, 6:46 pm

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