Home Buying in Livermore>Question Details

Brandy, Home Buyer in Livermore, CA

Should I pursue litigation if the sellers of a home back out after contingency is closed?

Asked by Brandy, Livermore, CA Tue Sep 16, 2008

My husband and myself were 2 weeks away from closing escrow. The sellers did not have anything in their contingency claus regarding finding a new home in So.Cal. However, last weekend we get a letter that they need to back and "sorry". They wrote a "sob story" on how they couldn't find a home in the desert like they had hoped. We are out more than a month of our time, and of course- all of the paperwork that we had signed. What should we do?

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There are three conversations that should take place while processing this issue.

1. Speak with your real estate professional

2. Speak with an attorney

3. Once you have clearly identified your options and their implications, talk with each other about the best course of action.

Understand, that in most cases like this one, a very large portion of what is gained is channeled to the attorneys involved.

Good luck,
0 votes Thank Flag Link Fri Sep 19, 2008
Brandy, Carl provides some good advice if you really want to pressure the Sellers; however, with all the supply out there right now its very likely that your time and effort may be better spent on finding an even better home.

Best Regards, -Steve
0 votes Thank Flag Link Thu Sep 18, 2008

Sorry to hear of your distressing situation. This certainly puts you in a difficult spot.

If the buyer cancels after contingencies have been removed, the seller can usually claim the deposit. If the seller cancels, however, it’s a different matter because the seller has no “skin in the game” other than their home. As a buyer, you have no access to any part of their home and, typically, you have no recourse unless you have incurred actual expenses or costs as a result of the transaction. You have to prove that you were “damaged” in some way to be able to have any recourse. “Damage” is usually interpreted as a financial loss of some kind.

Section 14. E. of the purchase agreement states that a notice of cancellation from either party must be in writing and must include instructions as to the disbursements of funds in escrow (your deposit). This is where you would begin your negotiations as to “damages” if, in fact, you have any. Damages might includes the following:
(1) Cost of inspections, appraisal and related fees.
(2) Prepaid moving expenses.
(3) Loss of the home you were renting, deposits, etc., and fees associated with finding new rental accommodations.

This section of the contract also stipulates that if a party will not cooperate (in this case, the seller), a civil fine of up to $1,000 can be levied.

You will need to add up any expenses you may have and forward these on to your Realtor/Broker. Have them negotiate with the seller and/or seller’s agent/Broker to reach a settlement. If that settlement is not to your liking, then you have the options of arbitration or small claims court. Your Realtor should be able to clarify your options for you.

The Realtors in the transaction can also put pressure on the seller by claiming their commissions. Once a property is in escrow and contingencies have been removed, both Realtors have technically earned their commissions. You cannot force the sellers to move, but through these various channels you may be able to make the cost of them staying higher than they might want to bear.

Web Reference: http://www.carlmedford.com
0 votes Thank Flag Link Tue Sep 16, 2008
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