Can a seller terminate contract after an extenion has been agreed to?

Asked by Daniel Dresen, Sacramento, CA Mon Jun 25, 2012

I was late in closing due to working with a mortgage broker. Now I am working with a direct lender and have a final loan approval and the second appraisal was completed. I have asked for escrow to be extended to the 6th, he agreed to the 7th with a surrender of 1,000 of the good faith deposit. I did, and lifted all contingencies. Now he wants to cancel for an all cash buyer at a higher price. What can I do?

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8
Bob Willett, , Sacramento, CA
Mon Jun 25, 2012
The seller can do whatever they want to do. The question is what are the consequences, and what can you do. This is really a legal question, and most of the people here are not qualified to give legal advice – including me. You have to look at what value buying the home you are in escrow with really is. Is it a great deal, and are you loosing equity by not buying it, what monies have you put out, and can you buy something comparable in today’s market?

The reason you have to do this is to you have to weigh the costs of the attorney with you potential benefit. It’s possible you could force the seller to sell to you and not allow them to sell to the cash buyer, but it may be expensive to do this. This doesn’t even consider the time and emotional costs involved. It may be worth the cost of an initial meeting with a qualified real estate attorney to figure out what is really involved. You could also consider just letting the deal go and then recover your cash expenses from small claim’s court.

Sorry this isn’t a “do this” or a “they can’t do that” answer. Hopefully it helps you decide what to do next.
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1 vote
Daniel, the small claims amount for CA was increased to $10,000 effective January 1, 2012 http://www.nolo.com/legal-encyclopedia/small-claims-suits-how-much-30031.html
Of course small claims is just for damages. They would not handle specific performance complaint. Your situation is an example for why people should have a Legal Shield plan. You could have your letter to the seller and his attorney in fact written for free. Just thought I mention it.
Flag Mon Jun 25, 2012
Small claims is only 5000$, I am over 9000$ invested into this. Not an option. So my option now is go to court. I am trying to look for someone who knows the exact real estate law he is violating (which he is) so I can put that in an email to ask him to reconsider prior to me seeking a specific performance motion against him. I hate being a dick, but in this case, I may have to in order to protect my interest in the home.
Flag Mon Jun 25, 2012
Ute Ferdig, Agent, Newcastle, CA
Mon Jun 25, 2012
You cannot just "file" a lis pendens. You have to first file a lawsuit and then you can record a lis pendens. Most likely will need approval from the judge. Did you agree to mediation/arbitration? Not sure you have to think litigation quite yet. You did not answer the question of whether you received a formal cancellation notice. It's always better to work things out. I think this seller will come around when he/she sees you are serious.
0 votes
He is not. My realtor recieved the papers and did not send them to me. That is another reason why I fired her. I saw the notice to perform, which based on everything, I have acted within the seller's request. I got the loan, appraisals are done, he wanted to close by July 7th. We could close July 6th, if he didn't throw this wrench in. Now I can't get the seller's agent on the phone.
Flag Mon Jun 25, 2012
Gina Borges-…, Agent, Sacramento, CA
Mon Jun 25, 2012
If you are working with an agent then I would suggest having his/her Broker review the file then make a call to the agent representing the seller. If that does not get the extension then I would consult with a Real Estate Attorney. This is a tough market but remaining ethical is crucial. You can keep that agent honest by bringing in the Broker or attorney if necessary. Best of luck!
0 votes
Ute Ferdig, Agent, Newcastle, CA
Mon Jun 25, 2012
Daniel, the small claims amount for CA was increased to $10,000 effective January 1, 2012 http://www.nolo.com/legal-encyclopedia/small-claims-suits-ho… Of course small claims is just for damages. They would not handle specific performance complaint. I also posted this as a comment, but was not sure if you would see it. Sorry you have to deal with this unpleasant situation.
0 votes
Patric Carpe…, Agent, Sacramento, CA
Mon Jun 25, 2012
The Purchase Agreement is skewed heavily in the favor of the buyer HOWEVER, if you are not performing, it is possible for a Seller to cancel the deal. They must first issue a Notice To Perform instructing you what you are contractually obligated to do. If you have not responded in the time alotted, then they can issue a Notice of Cancellation. But even then, you still have to agree to the Cancel. If you are legitimately performing, you should have no worries. If you are however, dragging things out, the Seller could pursue a damages claim against you as well. Not very likely but it is possible.
0 votes
Ute Ferdig, Agent, Newcastle, CA
Mon Jun 25, 2012
Based on what you describe and assuming the extension was in writing, the seller would be in breach of contract. Have you received a notice of cancellation or is the seller just saying he would like to cancel? Maybe, the seller just needs assurance that you will be able to close by the new deadline. If you received a notice of cancellation, a letter from an attorney may be in order just to put the seller on notice that you are serious about asserting your rights. I am sure the seller would not want to lock up the sale altogether because you file an action for specific performance and record a lis pendens which would prevent the seller from closing escrow.

Good luck with that and I hope you will close next Friday.

Ute Ferdig
DRE # 01326917
916-751-1267
0 votes
Teri Andrews…, Agent, Auburn, CA
Mon Jun 25, 2012
If you are working with an agent, you both should speak to their legal department, an attorney can review all the documentation and advise. There are paragraphs in the CAR contract that address both a buyer changing lenders/financing and when and how a seller can cancel, and what types of notice needs to be given. The seller should also be seeking legal advice.
0 votes
Cindy Davis, Agent, San Diego, CA
Mon Jun 25, 2012
He can't do that without breaching the contract. If he does, the door is open for you to take legal action. If he signed it, he must live by it. Are there Realtors involved here? If so, the listing agent should be able to explain the legalities to the seller. Do you have an agent? If so, your Realtor should be able to handle this with the listing agent.

Good luck.
0 votes
Your facts are getting more confusing. Are you saying the seller's agent has power of attorney to sign documents on behalf of the seller? Is the seller's agent also your agent?
Flag Mon Jun 25, 2012
There is an agent involved. Her failure to perform in a timely manner is what caused the seller to want to cancel. The seller's agent agreed to extend escrow though, and legally can as he has power of attorney over the real estate and selling it as the seller is in Nevada. Sucks for the seller, but it gives me that legal standing to show this is breach. I have a copy of the agent's POA signed by the seller as well as the agreement to extend escrow. I am about to fire the realtor for causing this negative issue.
Flag Mon Jun 25, 2012
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