Legal Question in Real Estate Law in California

You have a very complicated situation. You need to take your documents from both transactions to an attorney. Without reviewing the documents and talking about the details there is no way to reliably answer your question.

Are you represented in the transaction by a licensed broker or agent? How about the buyer? Who has been guiding you through the offer-and-acceptance, contract-writing, contract-creating process? Sounds like the buyer is breaching the purchase contract, and you may be entitled to forfeiture of his deposit or damages determined by a court, but it will depend upon the contract, amount of deposit held, etc. - I hope you have a significant deposit and appropriate escrow instructions.

If you have a licensed real estate salesperson, he or she would be the first to ask for advice, and could assist you in making a "perform or else" demand.

Sellers are seldom awarded "specific performance" in court (an order to buy) whereas nuyers can often obtain a judgment of specific performance ordering a seller to sell to the buyer under the terms of the purchase agreement. Nevertheless, you could obtain damages in excess of the deposit if you go to court and prove the amount.

Also, without proof in court of damages, a seller cannot usually retain deposit funds in excess of 3% of the purchase price.

You can sue the buyer for specific performance of the contract, or you can negotiate a cancellation of escrow on terms both parties agree to. Unfortunately, suing is likely to be time consuming and costly. If you need your equity out in order to close the purchase of your new house, you aren't going to get it 'out' and available until you sell the house and close escrow. Your goal should be to try to keep your deal together, based upon the threat of litigation. If serious about hiring counsel to advise and help you in this, feel free to contact me.