Seller refuses to release buyer's deposit money

A home, in Coarsegold, California, was on the market since December 1999. Asking price was $399,000. The seller was negotiating with a prospective buyer offering $365,000.

My wife and I fell in love with the property. The seller’s agent told our agent that if we made a strong offer it was in her client’s best interest to look at it. We made a full-price cash offer and placed a $5,000.00 deposit into our broker’s trust account. The seller accepted our offer and signed the Purchase Agreement, a Contract Addendum, and a Receipt of Deposit Addendum.

To demonstrate how serious we were, our agent stipulated in paragraph 14 of RPA-11 that his buyers had ten days after Acceptance, instead of the normal 14 days, to complete all inspections, investigations and review of reports and other applicable information for which the buyer is responsible. Our agent also extended the seller’s time from the normal five days from Acceptance to fourteen days, giving the seller more than ample time to order, request or complete all reports, disclosures and information for which the seller was responsible for under paragraphs 4, 5, 6 and 12 of RPA-11.

The Seller’s Advisory, that the seller signed, cautions the seller to disclose everything he knows and to fill out the “TDS” completely. Though the seller knew that a leaking roof caused damage to the walls and ceiling in the living room he did not disclose it to the buyers or on the Transfer Disclosure Statement. Upon seeing the damaged ceiling and walls our agent, in a Contract Addendum, required the seller to provide the buyers with documentation proving that the roof was repaired. The seller agreed to do so when he signed the contract but never did provide the buyers with the promised roof repair certification. The seller also failed to include, on the Transfer Disclosure Statement, a written statement of compliance as required by Chapter 98 of the Health and Safety Code 19211 and California Senate Bill 304.

In the Receipt of Deposit addendum, the seller promised to provide us with a copy of the property’s current tax bill within five days of his Acceptance of our purchase offer. The seller made no attempt provide us with the property tax bill and did not ask for an extension of time.

Because pitfalls sometimes show up in the preliminary (title) report we believed it was important that we review the report, within the time allotted them in Paragraph 12 and 14. We wanted to learn of any easements or restrictions on the use of the property included in the CC&R’s that the seller may not have mentioned. We did not receive this report.

In summary, the buyers only had a ten-day time frame to complete all inspections and to review all reports and disclosures that were to be provided by the seller. The seller never delivered the promised reports and disclosures and never requested an extension of time to do so. We, the buyers, delivered a letter addressed to our agent on 17 November 2000 expressing our wish to withdraw our offer and have our deposit returned. The letter was intended to be an “in-house” letter only, informing our agent of our wish to withdraw our offer because we had received no reports or disclosures from the seller. This letter was to our realtor only and was not intended to be a formal declaration canceling the Purchase Agreement. Our realtor advised us to submit a formal cancellation of our purchase offer after the seller's fourteen days were over. This we did.

As stated above, the seller normally has five days to carry out his obligations and responsibilities to provide disclosures and documents to the buyer and was given three times that amount of time to comply. However, on the morning of the fourteenth (and last) day the seller still had not requested, ordered, or delivered to the buyer any of the reports and disclosures that they, the sellers, were responsible for and that we, the buyers, needed to make an informed decision to continue with the purchase.

Our agent called the seller’s agent that morning and was told by the selling agent, that she did not have the time to discuss any business because she was on her way out of town to vacation in Mexico. It is apparent from the selling agent’s reply that she neither had the interest or the time to order or deliver the reports and disclosures required by the contract.

As the buyer, my questions are these:
1. Can the buyers be held liable for liquidated damages and lose their deposit due to a delay caused by the seller’s failure to provide the buyers with the promised and required disclosures?
2. Is the seller in breach of contract for failing to provide the buyers with his property tax bill on the fifth day after Acceptance as he promised in the Receipt of Deposit addendum?
3. If the seller did commit a breach on the fifth day does it cancel the Purchase Agreement?
4. What constitutes a cancellation of the Real Estate Purchase Agreement?
5. Does the buyers’ letter to their agent constitute a cancellation of the Purchase Agreement?
6. Does the cancellation of the Purchase Agreement require the consent and signatures of both the buyers and the seller?
7. Escrow is still open. If the buyers still want the required reports and disclosures is the seller still obligated to deliver them to the buyers?
8. What is the meaning of RPA-11, paragraph 5? The wording seems to imply that the seller is to deliver to the buyer, within the buyers’ time frame, the Transfer Disclosure Statement, Natural Hazard Disclosure Statement, Lead-Based Paint Hazard Disclosures, and other Disclosures with cancellation rights.

[HomeGuru]

1. No.
2. Yes.
3. Possibly.
4. Letter directly to Seller.
5. No.
6. No.
7. No because the Buyer terminated the contract.
8. You are correct.

Next time do not write such a long post.