Real Estate Litigation FAQs
Whether you are a property owner in the Inland Empire, landlord, broker, lender, or tenant, there are certain legal rights and responsibilities that you should be aware of. Find out about your rights and more by reading the answers to many commonly asked questions in our FAQ section.
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What can I do if a property seller backs out of our purchase contract?
This problem was prevalent in the time period when the property values were skyrocketing. In fact, there was a lot of litigation between buyers and sellers because we were seeing property values rise weekly and sellers were trying to capture the highest price regardless of the consequences to the buyer and his or her family. Right now, we do not see this problem as much because the property values are either sliding or are stable.
So if you find a home you really want and you have entered into a sales contract for the purchase of the property and the seller tries to back out of the sale, the purchaser may specifically enforce the sale of the property. This method of enforcement is through what is called “specific performance.” This is a cause of action that allows a court to equitably enforce your rights against the wrongful seller. In other words, the court can require the sale to take place upon the terms in the sales agreement and escrow instructions.
Specific Enforcement in Real Estate Agreements
Not every breach of contract can be specifically enforced because monetary damages can compensate the injured party for the breach. However, with real estate, there is a presumption that real estate is unique. The California Civil Code, section 3387, states: “It is to be presumed that the breach of an agreement to transfer real property cannot be adequately relieved by pecuniary compensation. In the case of a single-family dwelling which the party seeking performance intends to occupy, this presumption is conclusive. In all other cases, this presumption is a presumption affecting the burden of proof.” A conclusive presumption means it cannot be disputed.
If a seller tries to break the contract, the buyer must take immediate action to prevent the seller from selling the property to another purchaser. If the buyer does not act, the property may be sold, leaving the buyer with only monetary damages. Promptness is key.
These same rights of specific performance may not be enforceable by the seller. The seller’s rights may only be for damages. Seek immediate legal advice to enforce your rights if your contract was breached.
Contact David H. Ricks & Associates at 909-481-5856 to learn your legal rights under your real estate sales contract.