Fact Pattern: In last week’s legal tip, you discussed a situation where, in response to the buyer’s Request for Repairs, the seller agreed to remediate mold in the property. The seller, however, failed to remediate the mold before the buyer’s final walk-through. Our client, the buyer, just wants to cancel. How does the buyer’s agent go about making sure that the seller agrees to cancel and return the deposit to the buyer? 

Answer: Unfortunately, the buyer’s agent has no ability to give any assurances to the buyer about what the seller will or will not do. However, to help the buyer with the cancellation, the buyer’s agent should generally take a step-by-step approach, starting off by being nice with the other side, but become increasingly more adamant with each additional step. Here is a possible step-by-step strategy:

1. Step 1: Politely ask the listing agent whether, under these circumstances, the seller will agree to cancel. If the seller agrees, we can draft a Cancellation of Contract “per mutual agreement” (paragraph 1F) with the deposit to be released to the buyer, get it signed, and we’re done. If the seller doesn’t agree, go to Step 2.
2. Step 2: If Step 1 doesn’t work, issue a Demand to Close Escrow (DCE), reminding the seller that the mold has not been remediated (see discussion in last week’s Legal Tip). If the seller then remediates the mold, the buyer may want to review the work completed and any reports, and close escrow if satisfied. If, however, the seller does not remediate or the buyer is not satisfied with the remediation, go to Step 3.
3. Step 3: If Step 2 doesn’t work, then 3 days after issuance of the DCE, serve a Cancellation of Contract checking “Other” (paragraph 1G) and inserting something to the effect of “Seller has failed to remediate mold after being served a Demand to Close Escrow.” If the seller refuses to sign the cancellation, go to Step 4.
4. Step 4: Keep urging the listing agent to get the cancellation signed. Sometimes I will suggest to a buyer’s agent to ask the listing agent for permission to speak to the seller directly. Listing agents will generally not give you permission, but if the holdout is actually the listing agent, not seller, as is sometimes the case, asking to speak to the seller directly may light a little fire under the listing agent. If this step doesn’t work, go to Step 5.
5. Step 5: If none of the other steps work, you may ultimately have no choice but to tell your buyer that you have been unable to get the seller to sign the cancellation. The buyer may want to pursue the matter in small claims court up to $10,000, or consult with the buyer’s own attorney. Sometimes a strong demand letter on the attorney’s fancy letterhead will scare a seller into submission. If not, the attorney can help the buyer to pursue mediation, arbitration, or litigation as appropriate.

-Thank you to Trena Berk (Sherman Oaks Metro Arts Office) for suggesting this week’s legal tip.

Copyright© 2018 Berkshire Hathaway HomeServices California Properties (BHHSCP). All rights reserved. Any unauthorized reproduction or use of this material is strictly prohibited. This information is believed to be accurate as of September 4, 2018. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals.