Real Estate Purchase Agreement Breach Demand Letters
Real Estate Purchase Agreement Breach Demand Letters
California Buyer & Seller Rights
California Real Estate Purchase Agreements
Binding Contract: Once signed and delivered, purchase agreements are legally binding. Parties must perform or face breach of contract liability. California law provides specific remedies for buyers and sellers.
Key Purchase Agreement Terms
- Purchase Price: Amount buyer agrees to pay
- Deposit: Earnest money held in escrow (typically 1-3% of purchase price)
- Contingencies: Conditions that must be satisfied (financing, inspection, appraisal, sale of buyer’s home)
- Closing Date: Date transaction must close
- Time is of the Essence: Deadlines are strict and enforceable
- Disclosures: Seller’s obligation to disclose material defects
- As-Is vs. Contingent: Whether buyer accepts property condition or has inspection rights
Buyer’s Duties
- Deposit earnest money within specified time
- Obtain financing per contract terms
- Complete inspections within contingency period
- Remove contingencies or cancel per contract
- Close escrow on scheduled date
- Pay purchase price and closing costs
Seller’s Duties
- Provide required disclosures (Transfer Disclosure Statement, Natural Hazard Disclosure, etc.)
- Maintain property in same condition as contract date (no waste)
- Allow buyer access for inspections
- Deliver property vacant (if agreed) or with tenant leases (if investment property)
- Convey clear title free of liens and encumbrances (except disclosed)
- Close escrow and transfer title
Common Breaches
Buyer Breaches
- Failure to Close: Buyer doesn’t obtain financing or simply backs out without valid contingency
- Failure to Deposit Earnest Money: Buyer doesn’t deliver deposit within contract deadline
- Wrongful Cancellation: Buyer cancels without valid contingency or after contingency period expires
- Delays: Buyer causes delays in loan approval or scheduling closing
Seller Breaches
- Refuses to Sell: Seller backs out, often because property value increased or better offer received
- Sells to Another Buyer: Seller accepts backup offer and cancels contract with original buyer
- Failure to Disclose Defects: Seller knowingly conceals material defects
- Property Damage: Seller allows property to deteriorate or damages property before closing
- Cannot Deliver Clear Title: Seller has liens, judgments, or title defects that can’t be cleared
- Refuses Access: Seller won’t allow buyer access for inspections or final walk-through
Mutual Breaches
- Both parties fail to close on time
- Disputes over interpretation of contract terms
- Disagreements over inspection repairs or credits
- Title issues discovered late in escrow
Writing Your Demand Letter
Before Sending Demand
- Review purchase agreement carefully – understand your rights
- Document the breach (emails, escrow communications, inspection reports)
- Calculate damages (lost deposit, price difference, carrying costs)
- Check for arbitration or mediation clause
- Determine your goal: force performance or cancel and sue for damages
Demand Letter Components
| Component | What to Include |
|---|---|
| Contract Reference | Date, parties, property address, purchase price |
| Statement of Breach | Specific contract provision breached and how |
| Deadline to Cure | Typically 3-10 days for seller to perform or buyer to close |
| Demand | Specific performance (close escrow) or cancel and return deposit plus damages |
| Damages | Calculate lost profits, price difference, carrying costs, attorney fees |
| Remedies | State you will file lawsuit for specific performance or damages if not cured |
Sample Demand Letters
Sample 1: Buyer Demands Seller Perform
[Buyer Name]
[Address]
[Date]
[Seller Name]
[Address]
SENT VIA CERTIFIED MAIL AND EMAIL
RE: DEMAND FOR SPECIFIC PERFORMANCE
Purchase Agreement dated [Date] for [Property Address]
Dear [Seller]:
You are in breach of the Purchase Agreement dated [Date] for the property located at [Property Address].
CONTRACT TERMS:
Purchase Price: $[Amount]
Closing Date: [Date]
Contingencies: [All removed or N/A]
YOUR BREACH:
On [Date], you notified me (through your agent/attorney) that you are refusing to sell the property. You stated [reason: got better offer, changed mind, market went up, etc.].
You have no legal right to cancel the Purchase Agreement. All contingencies have been removed. I have obtained financing approval. I am ready, willing, and able to close.
DEMAND FOR SPECIFIC PERFORMANCE:
I demand that you immediately proceed with closing escrow. You must:
• Execute all necessary closing documents
• Deliver possession of the property
• Close escrow within [X] days of receipt of this letter
CONSEQUENCES:
If you do not proceed with closing within [X] days, I will file a lawsuit for specific performance seeking:
• Court order requiring you to sell the property to me per contract terms
• Damages for delay (carrying costs on my loan, storage fees, temporary housing)
• Attorney fees and court costs per Purchase Agreement § [X]
• Lis pendens (notice of pending action) recorded against the property, preventing you from selling to anyone else
California Civil Code § 3384 provides that buyers of real property are entitled to specific performance of the purchase agreement. Courts routinely grant specific performance because real property is unique.
TIME IS OF THE ESSENCE. Close escrow immediately or face litigation.
Sincerely,
[Your Signature]
[Your Name]
CC: Escrow Officer, [Escrow Company]
Sample 2: Seller Demands Buyer Close or Forfeit Deposit
[Seller Name]
[Address]
[Date]
[Buyer Name]
[Address]
RE: DEMAND TO CLOSE ESCROW – NOTICE OF BREACH
Purchase Agreement for [Property Address]
Dear [Buyer]:
You are in breach of the Purchase Agreement dated [Date].
CONTRACT TERMS:
Closing Date: [Date – 2 weeks ago]
Your Deposit: $[Amount]
YOUR BREACH:
The contract required closing on [Date]. You have not closed and have provided no valid excuse for delay. Your lender has approved your loan. All contingencies were removed on [Date]. You are simply refusing to perform.
I have kept the property off the market for [X] months while waiting for you to close. I have incurred mortgage payments, property taxes, insurance, and utilities totaling $[Amount] during this delay.
DEMAND TO CLOSE OR CANCEL:
You must close escrow within 5 business days of receipt of this letter. If you do not close within 5 days, I will:
• Cancel the Purchase Agreement for your material breach
• Retain your $[Deposit Amount] earnest money deposit as liquidated damages per Purchase Agreement § [X]
• Relist the property for sale
• Sue you for additional damages if I must sell for lower price
DAMAGES I WILL SEEK:
If I am forced to sell for less than your contract price of $[Amount]:
• Difference between your contract price and ultimate sales price
• Carrying costs (mortgage, taxes, insurance) from scheduled closing date until actual sale
• Real estate commissions and costs to relist property
• Attorney fees
Close escrow immediately or I will exercise all remedies.
Sincerely,
[Your Signature]
[Your Name]
Sample 3: Buyer Demands Disclosure Breach Damages
[Buyer Name]
[Address]
[Date]
[Seller Name]
[Address]
RE: DEMAND FOR DAMAGES – FAILURE TO DISCLOSE MATERIAL DEFECTS
Property: [Address]
Dear [Seller]:
I am writing to demand compensation for your failure to disclose material defects in the property at [Address], which I purchased from you per Purchase Agreement dated [Date].
SELLER’S DISCLOSURE FRAUD:
In your Transfer Disclosure Statement, you checked “No” for the following question: “Are you aware of any structural damage to the property?”
After moving in on [Date], I discovered extensive foundation cracks and water intrusion in the basement. I hired a structural engineer who determined the foundation has [specific defect] that existed for years before sale.
You clearly knew about this defect:
• [Prior repair estimates found in garage dated [Date]]
• [Neighbor states you told them about foundation issues]
• [Evidence of your attempts to patch and cover cracks before listing]
Civil Code § 1102 requires sellers to disclose all known material defects. You violated this duty by failing to disclose the foundation issues.
DAMAGES:
Cost to repair foundation: $[Amount] (per attached engineer’s report and contractor bids)
Diminished property value: $[Amount]
Attorney fees (per Purchase Agreement): $[Amount]
TOTAL DAMAGES: $[Amount]
DEMAND:
I demand payment of $[Amount] within 30 days. If you do not pay within 30 days, I will file a lawsuit for:
• Breach of contract
• Fraud and intentional misrepresentation
• Negligent misrepresentation
• Violation of Civil Code § 1102
I will seek compensatory damages, punitive damages, and attorney fees.
Respond immediately.
Sincerely,
[Your Signature]
[Your Name]
Attachments:
– Structural engineer report
– Contractor repair bids
– Photos of foundation damage
Remedies for Breach
Buyer Remedies (Seller Breaches)
- Specific Performance: Sue to force seller to sell property per contract (most common remedy)
- Rescission & Damages: Cancel contract, recover deposit plus damages (price difference if market increased)
- Damages Only: Keep contract alive, sue for delay damages while waiting for seller to perform
Seller Remedies (Buyer Breaches)
- Retain Deposit: Keep earnest money as liquidated damages (if contract allows)
- Sue for Damages: If deposit insufficient, sue for difference between contract price and resale price plus carrying costs
- Specific Performance: Rarely successful (courts don’t force buyers to purchase if they lack funds)
Disclosure Breach Remedies
- Sue for cost to repair undisclosed defects
- Sue for diminished property value (difference between value as disclosed vs. actual value)
- Fraud claims: seek punitive damages if seller intentionally concealed defects
- Rescission: in extreme cases, unwind sale and return property
Arbitration vs. Litigation
Many purchase agreements include arbitration clauses:
- Arbitration is binding and faster than court
- Limited discovery and no jury trial
- May be required for disputes under certain dollar amount
- Specific performance claims often excluded from arbitration
Attorney Services
Real Estate Deal Falling Apart?
I represent buyers and sellers in purchase agreement disputes. I draft demand letters, file specific performance actions, and litigate breach of contract and disclosure claims.
How I Can Help
- Draft demand letters citing breach and demanding performance
- File specific performance lawsuits (buyers forcing sellers to sell)
- File lis pendens to prevent seller from selling to others
- Represent sellers in deposit forfeiture disputes
- Litigate disclosure fraud claims
- Negotiate settlements and mutual release agreements
Schedule a Call
Book a call to discuss your real estate purchase dispute. I’ll review your agreement, assess your rights, and advise on the best strategy for enforcing the contract or recovering damages.
Contact Information
Email: owner@terms.law
Frequently Asked Questions
No. Once purchase agreement is signed and all contingencies removed, seller is legally obligated to sell. Getting a better offer is not a valid reason to cancel. Buyer can sue for specific performance, forcing seller to sell per contract terms. Seller may also owe damages for delay or breach.
If buyer wrongfully cancels or fails to close without valid contingency, seller can retain deposit as liquidated damages (if contract allows). If deposit is insufficient to cover seller’s damages (e.g., seller must sell for lower price), seller can sue buyer for additional damages. However, if seller cannot prove actual damages, may only keep deposit amount specified in contract.
Yes. If seller knew about material defects and failed to disclose on Transfer Disclosure Statement, buyer can sue for fraud, breach of contract, and violation of Civil Code § 1102. Recoverable damages: cost to repair defect, diminished property value, and attorney fees. Punitive damages available if seller intentionally concealed defects. Must prove seller knew about defect before sale—mere “should have known” is not enough for fraud.