Real Estate Purchase Lawsuits

“They are guided by the literal contract and also ‘good faith and fair dealing.'”

Real Estate Purchase Lawsuits


     The COVID crisis has accelerated real estate purchase disputes.  Buyers are backing out in the middle of the transaction.  Sellers are backing out.  I have a current case where the seller backed out after the buyer’s loan had funded.  The seller refused to leave even though their furniture was being delivered!  It is amazing how stress affects people.

      The California real estate purchase contract, as presented by CAR (California Association of Realtors) is a really fascinating contract.  It is not truly binding on both parties until the continencies are clear.  The contingencies are typically loan, appraisal and inspection contingencies.  In a seller’s market, you will hear someone bought a home “All Cash, No Contingencies.”  This means the buyer is so serious and adamant about the purchase, they are willing to purchase the property without having their own (or sometimes any) professional review the property.  “All cash,” means generally no loan, not literally bags of cash.

      During the contingency period, a buyer could back out of the deal in a manner consistent with the purchase agreement.  They are guided by the literal contract and also “good faith and fair dealing.”




   But after the contingencies are released (under CAR not automatically), the contract becomes truly executory.  That means both parties have an obligation to complete the terms of the contract…sale for money.  Seller must sell.  Buyer must buy.


      Nevertheless, if either party breaches at any time during the sale process, the parties are generally obligated to first mediate and then arbitrate.  Generally, if you refuse to mediate, you may lose your right to attorney’s fees as a prevailing party.  If you head to superior court first, then you may lose your right to arbitrate.  Many attorneys will tell you that they would prefer superior court to arbitration, mainly because arbitrators are not obligated to follow the law and their decisions are not generally appealable.

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