Legal Question in Real Estate Law in California

Re: Seller's right to cancel sale of property

It depends on whether or not "time was of the essence." If time was of the essence, then the buyer's failure to obtain financing by a certain date is a failure of a contingency. If time was no of the essence, then most courts would deem you to be unreasonable.

Very truly yours,

Re: Seller's right to cancel sale of property

You have no further obligations to anyone since you performed all of those obligations. You had a binding contract to sell the property as long as the buyer put up the agreed to selling price by 6/29; their failure to do so means they are in breach of the contract. Most real estate contracts have a provision for liquidated damages for a situation like yours; check to see if you have one because that would typically allow you to retain the entire down payment as damages. You could also sue to enforce the contract of sale but you indicated you would not want to do that. Just to be safe, you could send the buyer a letter telling them that they breached the agreement in the following manner, they are no longer entitled to buy the property, you have the right to sue them for your damages or collect any liquidated damages. point out that it was a lack of courtsey not to tell you they had not lined a loan up. Write your broker and ask if true that he/she knew there was no loan and why she did not tell you. Point out that she is entitled to a commission only if there was a valid offer at your desired price, which there was not. You might also want to speak with the managing broker as to the lack of good faith and honesty.the

Re: Seller's right to cancel sale of property

Your facts are not complete enough to be able to say that you no longer have any contractual obligations.

If you used the C.A.R. purchase contract, there are many buyer contingencies other than the loan contingency.

In particular, there is the inspection contingency. The C.A.R. contract, if unmodified says that if the buyer fails to remove the contingency within 17 days of acceptance, you (the seller) can give the buyer a 24 hour Notice to Perform. After delivery of that notice, if buyer still fails to remove the contingency, in writing, then you, the seller, have the right to cancel the contract.

If you fail to give the Notice to Perform, then the contingency continues, even if more than 17 days has passed since acceptance. If this is the case, then you do not have the right to cancel the deal, as the buyer will not be in breach.

If, on the other hand, the buyer has removed all contingencies, and then fails to close escrow,the buyer will be in breach. This will either allow you to keep the buyer's deposit (up to 3% of the purchase price), if you initialed the liquidated damages provision, or sue the buyer for damages, if you did not initial the liquidated damages provision.

Feel free to contact me with any questions.