South San Francisco, CA asked in Contracts and Real Estate Law for California

Q: Can the sellers cancel a counteroffer contract after both buyers and sellers have signed?

The buyers sent an offer to the sellers through their agent. The sellers sent a counteroffer. The buyers agreed to the counteroffer and signed the contract. The buyers agent sent the signed contract to the sellers agent via email.

The following day, the seller verbally told their agent they want to cancel the transaction and unlist the home for sale. The seller's agent claims she spoke to her clients before seeing the signed counteroffer via her email so she is denying acknowledging receipt of the contract since she spoke to her clients first before seeing the email.

The seller's agent told buyer's agent that seller is canceling. No cancellation of contract has been sent to the buyers. Is this legal? Agents are both saying to the buyer that there is no contract any longer. Is this correct?

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1 Lawyer Answer
James A. Greer
James A. Greer
  • Boulder, CO
  • Licensed in California

A: Dear Buyer of "cancelled" Purchase Contract: The moment the Buyer delivers an executed Counter-Offer a BINDING CONTRACT FOR SALE is formed. Seller will try and position that the "delivery" was not effective because Seller's Agent failed to look at her email. Buyer will maintain that the "delivery" is effective as soon as the email was sent. In my opinion, the Buyer has the prevailing position. NEXT STEPS: the Seller will ask Buyer to accept a return of the Earnest Money (if using title company, it will come in the form of a formal cancellation of escrow and return of earnest money type of document). If Buyer signs the Cancellation Instruction, they risk having waived any further claim against Seller for the cancelled sale. A standard California purchase contract provides for Mediation and then Arbitration as the dispute mechanism. If representing the Buyer I would urge them to consider engaging these contractual dispute mechanisms. This matter requires the parties to strongly consider employing legal assistance, in my opinion.

Yelena Gurevich agrees with this answer

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