<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by Sunny:
I want to back out of an offer to purchase a new home through no fault of the builder/owner. I understand I will lose the deposit but can I be liable for damages over and above this down payment? Thanks.<HR></BLOCKQUOTE>
My response:
Yes, the seller can demand, and if unpaid, sue you for, any and all "reasonably unavoidable" expenses above and beyond the amount of your deposit. The seller may retain the buyer's deposit as a source of funds from which to recover its damages. [Beason v. Griff (1954) 127 Cal.App.2d 382, 274 P.2d 47, 52; see Wade v. Lake County Title Co. (1970) 6 Cal.App.3d 824, 830-831, 86 Cal.Rptr. 183, 186]
Consequential damages: Ca Civil § 3307 permits a seller to recover "consequential damages according to proof".
"Consequential damages" are those damages suffered by a seller that result from the "natural consequence" of the buyer's breach and that are reasonable, foreseeable and necessary to make the seller "whole." [Royer v. Carter (1951) 37 Cal.2d 544, 550, 233 P.2d 539, 543] For example, consequential damages would include expenses incurred by a seller in holding and reselling the property after the buyer's breach. [Nielsen v. Farrington (1990) 223 Cal.App.3d 1582, 1586-1588, 273 Cal.Rptr. 312, 314-315]
Recoverable despite no general damages: In a stable or appreciating market, the seller will not be able to recover general damages (because the property value on the date of the buyer's breach will equal or exceed the contract price). Nonetheless, the seller may still be entitled to consequential damages. [Royer v. Carter (1951) 37 Cal.2d 544, 550, 233 P.2d 539, 543; Wade v. Lake County Title Co. (1970) 6 Cal.App.3d 824, 830, 86 Cal.Rptr. 182, 186]
Limitation - - seller's duty to mitigate damages: The seller is not entitled to recover reasonably "avoidable" consequential damages. Thus, a consequential damages recovery is dependent on the seller's duty to mitigate damages by using reasonable diligence to resell the property. [Nielsen v. Farrington, supra, 223 Cal.App.3d at 1589-1590, 273 Cal.Rptr. at 317; Askari v. R & R Land Co., supra, 179 Cal.App.3d at 1107, 225 Cal.Rptr. at 289; Smith v. Mady, supra, 146 Cal.App.3d at 132, 194 Cal.Rptr. at 44]
Good luck to you.
IAAL
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