Home Buying in Fresno>Question Details

venky.ramasub, Home Buyer in Los Angeles, CA

Seller sue in small claim court for $5000 for Liquidated damages. He is withholding the escro deposit of $2500 and not releasing.

Asked by venky.ramasub, Los Angeles, CA Tue Jan 29, 2013

Contract Acceptance: 11/16/12
Deposit to be sent to escrow: 11/20/12
17 days to remove contingencies in writing: 12/3/12
Notice for performance sent by Seller on to buyer agent and signed on 12/8/12
We sent cancellation on 12/10/12. It was to remove the loan contingency.

Reason buyer could not obtain financing from seller mandated lender and appraisal not in during contingency period.

on the notice states that plaintiff claims are for $5,000 for liquidated damages in the amount of $500 plus 3% of the sales price of $150,000 ($4,500).
Please refer to contract #25 on page 7, Liquidated damages: If buyer fails to complete this purchase because of buyers default, seller shall retain as
liquidated damages the deposit actually paid. If the property is a dwelling with no more than four units, one of which buyer intends to occupy, then
the amount retained shall be no more than 3% of the purchase price.

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Answers

4
The CAR RPA clearly states many times in BOLD letters time is of the essence. This is why which Realtor you choose is very important.
I am hired to advise and protect my clients. I take my responsibility very important so things like this don't happen. Because if you don't perform per contract guidelines this can happen.
0 votes Thank Flag Link Tue Jan 29, 2013
This sounds like Venky was the buyer, and is being sued by the seller who wants to enforce a contractual security deposit default. Maybe Venky wants someone to guess if he has any defense?

This is clearly a legal Q, but from my experience, it's possible to write a security clause wrong, and
if so, it may be unenforcable.

Good luck in court.
0 votes Thank Flag Link Tue Jan 29, 2013
Tim,
I think we should sponsor him to review our Purchase Agreements,
what do you think?
0 votes Thank Flag Link Tue Jan 29, 2013
Since there is not a question mark in all of that I have to assume it is not a question but some sort of legal brief or comment.
0 votes Thank Flag Link Tue Jan 29, 2013
So cancelling contract after 17 days without releasing contingency from buyer side is considered as " buyer default"?
The seller has sued me saying that I defaulted the purchase and claiming 3% of property value for Liquidated Damages.
He has not yet returned any of my escrow.

Also we have not released any contigency.


The Liquidated Damages clause says:(Its signed by both buyer (myself) and seller)
If Buyer fails to complere this purchase because of Buyer's default, seller shall retain, as liquidated
damages, the deposit actually paid. If the property is a dwelling with no more than four units, one of which buyer intend
to occupy, then the amount retained shal be no more than 3% of the purchase price. Any excess shall be returned to buyer.
Release of funds will require mutual , Signed release instructions from both buyer and seller, Judicial decision
or arbitratrion award. AT TIME OF INCREASED DEPOSIT BUYER AND SELLER SHALL SIGN A SEPARAT
Flag Tue Jan 29, 2013
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