Legal Question in Real Estate Law in California

Re: Specific Performance?

You retain an attorney to represent you in the lawsuit for specific performance. You will probably have to pay the attorney fees and then hope to collect them from the buyer. Also a lawsuit for specific performance will take at least a year and probably more.

Re: Specific Performance?

As a general rule, a seller of real property cannot force a buyer to purchase that property; however, a buyer can almost always force a seller to sell that property. This is becuase the law considers real property unique in nature. Thus, a non-defaulting buyer can generally obtain a decree of specific performance, compelling the seller to transfer the property; while a non-defaulting seller is almost always limited to the liquidated damages as per the contract.

You are using the C.A.R. forms. Every version has a liquidated damages clause that provides that upon default by buyer, the seller can keep as liquidated damages the buyer's deposit, up to 3% of the purchase price.

The lesson here for you is to only entertain offers from buyers who can deposit that 3% into escrow. $2,000 is hardly a good faith deposit.

You can sue the buyer for more, but as you will find, litigation takes a long time. Moreover, the standard CAR contract provides for (1) mandatory mediation, and (2) binding arbitration (if you agreed to it).

Good luck.

Re: Specific Performance?

Furthermore, specific peerformance is more easily obtained by a buyer when the seller refuses to honor a contract to sell than by a seller when the buyer refuses to go through with his obligation to purchase. However, you can probably get money damages BUT here are the contractual problems you must consider before deciding to sue for anything:

1. Did the parties check the "mediation" or "arbitration" boxes on the contract? If so, those procedures must be followed before suit (or instead of suit).

2. Does the contract specify that the buyer's deposit will be considered liquidated damages in the event buyer defaults? If so, that's probably all you'll get, either in arbitration or in court.

3. Is there an attorney fee clause in the contract? If so, this is very helpful to the party that is likely to prevail, whether in court or before an arbitrator.

The standard CAR forms provide boxes for the parties to agree, or not, to these provisions. Not everyone ticks the boxes to activate the provisions, but many do. Whether these provisions are applicable to your contract will determine your rights and guide your proper strategy.