Legal Question in Real Estate Law in California
Can the seller ask for the earnest money if all contingencies were met (appraisal, inspection, and loan approval) but buyer'/ realtor never in good faith removed the contingencies after they all passed. The buyer's realtor said he would send the forms and never did. We signed the title paperwork on a Friday. We moved out and signed a rental lease on Saturday. Buyers signed the title paper that same Saturday and did a final walk through on Sunday. Buyer's lender asked us to release the deposit back to them so that they have a paper trail that the funds came from their father as a gift the following Monday. The deposit release form states the funds were to be used toward the closing cost. We were waiting for the buyers to put down their deposit and closing cost to finalize the transaction. The day after we were supposed to close, we received a call that the buyer's agent stating they could not come up with the funds and will not be purchasing our home. We had to pay for the mortgage and rental so we are out a couple of thousands. We also accepted an offer that is lower than their offer (appraisal came at the same price the first buyer'a offered). They also did not initial the liquidated assets clause as their realtor advised them not to because they did not have enough cash in the beginning to purchases the home (per my conversation with the buyer). He advised them that they could go all the way through with the sale and cancel at the last minute and the buyer would still be able to receive Their deposit because they did not initial that clause. What are our chances of getting anything for breach of contract or damage?
1 Answer from Attorneys
You have rather a mess here, and so do the buyers. Both of your real estate agents really screwed up. First off, their agent is wrong. By not initialing that clause, they did not get a right to back out. They opened themselves up to full liability for all your damages, including the difference in the original sale price and what you got from a new buyer. Now the bad news, by letting the contingency time pass and not forcing them to remove or cancel, they may in fact be able to walk away. YOUR agent should have advised you to force them to remove or cancel back when the contingency removal was due. Without reviewing all the documents and facts of the situation, there is no way I can tell you whether the buyers can walk. It sounds like they may have a contractual out, but be back on the hook for intentionally entering the contract while intending to walk if they couldn't come up with cash they didn't have, which is a form of fraud. If the buyers DO walk, your agent then becomes the target. I suggest you meet with a lawyer with all the documents and go over the details to sort out what your real options are.
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