Default on Purchase Agreement by Buyer or Seller in Los Angeles, California

Are you involved in a real estate transaction where the other party (seller or buyer) has defaulted on the agreement? At the Law Office of Steven R. Lovett, our Los Angeles real estate lawyer boasts almost 40 years of experience in the field of real estate law. Attorney Lovett is included in Southern California's selection of Super Lawyers® and is a member of the California Association of Realtors lawyer referral panel.

With involvement in hundreds of complex commercial, real estate, and construction litigation trials and arbitrations representing institutional lenders, architects, designers, contractors, subcontractors and homeowners, Attorney Lovett has the knowledge and experience to represent you in your real estate matter competently and effectively.

Legal Remedies When the Seller or Buyer Defaults

Many buyers and sellers approach us after the other party has defaulted on their contract, wondering what legal remedies are available. Standard real estate contracts will contain provisions relating to defaults on behalf of the buyer and seller. Real estate contracts contain various contingencies such as obtaining a satisfactory home inspection, or obtaining a firm loan commitment, or sometimes selling the purchaser's current residence.

These contingencies usually contain time constraints, where the contract either becomes null and void or becomes a valid and binding contract. Each specific contingency will spell out the consequences of not meeting the deadlines. Once all contingencies have been removed, the seller and buyer are legally obligated to complete the sale. If the buyer defaults (fails to perform a legal duty), the seller has three remedies available:

  • Keep the earnest money deposit: While the seller generally has the right to keep the deposit and put the house back on the market after a default, the person holding the money is the escrow agent, who doesn't have the unilateral right to release the deposit to either party; therefore the matter may require a court order.
  • Sue for specific performance: In which case the buyer asks the judge to order the buyer to go to closing.
  • Bring a lawsuit for damages: The seller has the right to file a suit against the buyer for damages, which may include additional losses incurred by the seller.

If a seller defaults, the buyer has every right to sue for specific performance and for damages. When a seller defaults, it's usually because he or she believes they can get a higher price for the property. In most jurisdictions, such a suit would be accompanied by documents recorded against the property and land records, thus putting a cloud on the seller's title known as a lis pendens. In cases such as these, no prudent buyer would dare consider buying a property while there was a lawsuit pending in court.

Are you currently engaged in a dispute over a real estate contract and a defaulting party? Know your rights, contact our Los Angeles real estate attorney today!


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