📋 Understanding Closing Delays

A closing delay occurs when a real estate transaction fails to close by the agreed-upon date specified in the purchase agreement. In California, the standard California Association of Realtors (CAR) Residential Purchase Agreement (RPA) sets specific closing deadlines, and delays can result in significant financial harm to the non-breaching party. Understanding your rights and remedies is critical to protecting your interests.

When to Use This Guide

Use this guide if you are dealing with a closing delay caused by:

💰 Buyer Financing Issues

Buyer cannot obtain loan approval or funding by the closing date

📈 Appraisal Problems

Property appraises below purchase price, causing lender issues

🚫 Seller Non-Performance

Seller fails to clear title, make repairs, or vacate the property

📄 Title Issues

Liens, encumbrances, or ownership disputes delay closing

🏠 Property Condition

Inspection issues or required repairs not completed timely

👍 What You Can Recover

  • Per diem costs - Daily costs incurred due to the delay (mortgage interest, rent, storage)
  • Rate lock extension fees - Fees to extend or renegotiate loan rate locks
  • Temporary housing costs - Hotel, short-term rental, or double housing expenses
  • Moving and storage costs - Extra expenses from rescheduled moves
  • Lost opportunity damages - Provable losses from the delay
  • Attorney fees - If your purchase agreement contains an attorney fee provision

Common Causes of Closing Delays

💰 Financing Delays

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The most common cause of closing delays. Buyers may face unexpected underwriting issues, employment verification problems, debt-to-income ratio concerns, or last-minute lender requirements. Under the CAR RPA, buyers typically have a loan contingency period to secure financing. If financing falls through after contingency removal, the buyer may be in default.

📈 Appraisal Issues

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When the property appraises below the purchase price, lenders typically will not fund the full loan amount. This can delay closing while parties negotiate a price reduction, the buyer brings additional cash, or the appraisal is challenged. The appraisal contingency in the CAR RPA provides specific timelines and procedures for handling low appraisals.

📄 Title Problems

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Unexpected liens, judgments, easements, boundary disputes, or ownership issues discovered during title search can delay closing. The seller is typically obligated to deliver clear title, and delays in resolving title issues are usually the seller's responsibility. Title insurance requirements may also create delays if issues cannot be insured around.

🏠 Seller-Related Delays

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Sellers may delay closing by failing to complete agreed-upon repairs, not providing required disclosures, being unable to vacate the property, or having issues with their own replacement housing. If the seller signed a rent-back agreement, complications with their move can impact the buyer's timeline.

🔍 Inspection and Repair Issues

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If the parties agreed to repairs as part of the transaction, delays in completing those repairs can push back closing. Permit requirements, contractor availability, or discovery of additional issues during repairs can extend timelines beyond the original closing date.

⚠ Time is Critical

California has a 4-year statute of limitations for written contract claims (Code of Civil Procedure 337). However, the CAR RPA contains specific notice and cure periods that must be followed precisely. Missing a contractual deadline can waive your rights. Act immediately when delays occur and document everything in writing.

✅ Evidence Checklist

Gather these documents before sending your demand letter. Click to check off items as you collect them.

📄 Contract Documents

  • ✓ Residential Purchase Agreement (RPA) with all signatures
  • ✓ All counter-offers and addenda
  • ✓ Any extension agreements or amendments
  • ✓ Escrow instructions showing closing date

📅 Timeline Documentation

  • ✓ Original scheduled closing date documentation
  • ✓ All communications about delay causes
  • ✓ Notice to Perform (if issued)
  • ✓ Proof of delivery for all notices

💰 Financial Damages Evidence

  • ✓ Rate lock extension fee documentation
  • ✓ Temporary housing receipts (hotel, rental)
  • ✓ Storage unit contracts and receipts
  • ✓ Extra moving company charges

📩 Communications

  • ✓ All emails between agents and parties
  • ✓ Text messages regarding the delay
  • ✓ Written explanations of delay reasons
  • ✓ Lender communications (if financing issue)

🔒 Preserve All Evidence

Keep originals of all documents. Screenshot text messages and save emails. Document all phone calls with follow-up written confirmation. Your paper trail proves when the delay occurred, who caused it, and what damages you suffered. Evidence of the other party's knowledge and acknowledgment of the delay is particularly important.

💰 Calculate Your Damages

Closing delays can cause significant financial harm. Here are the categories of damages you may be entitled to recover.

Damage Category Description
Per Diem Housing Costs Daily costs of maintaining two residences - mortgage/rent on current home plus carrying costs on new property
Rate Lock Extension Fees Fees charged by lender to extend mortgage rate lock; increased interest if lock expires and rates rise
Temporary Housing Hotel, Airbnb, short-term rental costs if you had to vacate your previous residence
Storage Costs Monthly storage unit fees for furniture and belongings
Moving Expenses Rescheduling fees, double moves, additional labor costs
Lost Rental Income If investment property, lost rent during delay period
Attorney Fees If your purchase agreement has an attorney fee clause (most CAR forms do)

💡 Duty to Mitigate

Under California law, the non-breaching party has a duty to mitigate (minimize) damages. You must take reasonable steps to reduce your losses. For example, if an extension is offered at no cost, refusing it and then claiming large damages may be problematic. Document your mitigation efforts.

📊 Sample Damages Calculation

Example: 14-Day Closing Delay Caused by Seller

Current mortgage (14 days at $150/day) $2,100
Rate lock extension fee (0.25% of $600,000 loan) $1,500
Hotel stay (14 nights at $189/night) $2,646
Storage unit (1 month) $350
Moving reschedule fee $400
Pet boarding (14 days) $560
TOTAL DELAY DAMAGES $7,556

💰 Attorney Fee Recovery

Under California Civil Code 1717, if your purchase agreement contains an attorney fee provision (and CAR forms do), the prevailing party in a dispute can recover their attorney fees. This makes it financially viable to pursue even moderate delay damage claims through litigation or arbitration.

Seller Default vs. Buyer Default

🚫 If Seller Delays/Defaults

Buyer may recover actual damages without limitation - all provable losses caused by the delay including per diem costs, rate lock fees, temporary housing, moving costs, and more.

⚠ If Buyer Delays/Defaults

Seller's damages may be limited to the liquidated damages amount (typically 3% of purchase price for owner-occupied residences) if that provision was initialed by both parties.

📝 Sample Language

Copy and customize these paragraphs for your demand letter.

Opening - Demand for Performance
I am writing regarding the Residential Purchase Agreement dated [CONTRACT DATE] for the property located at [PROPERTY ADDRESS]. The agreed-upon closing date of [ORIGINAL CLOSING DATE] has passed, and escrow has not closed due to your failure to [DESCRIBE SELLER'S/BUYER'S FAILURE]. This letter constitutes formal demand for immediate performance and compensation for damages caused by this delay.
Time is of the Essence Paragraph
As stated in Paragraph 14 of our Residential Purchase Agreement, time is of the essence. The contract specified closing no later than [CLOSING DATE]. Your failure to perform by this date constitutes a material breach of the agreement. Under California law and the express terms of our contract, I am entitled to enforce strict compliance with the contractual deadlines.
Damages Documentation
As a direct result of your delay, I have incurred the following damages: (1) Rate lock extension fee of $[AMOUNT] charged by my lender; (2) Temporary housing costs of $[AMOUNT] for [NUMBER] days; (3) Storage costs of $[AMOUNT]; (4) Additional moving expenses of $[AMOUNT]; and (5) Per diem carrying costs of $[DAILY AMOUNT] per day for [NUMBER] days, totaling $[TOTAL]. These damages continue to accrue daily until closing occurs.
Notice to Perform Reference
On [DATE], I delivered a Notice to Perform (CAR Form NBP) to you via [METHOD OF DELIVERY], demanding that you [REQUIRED PERFORMANCE] within [NUMBER] days. As of the date of this letter, you have failed to comply with the Notice to Perform, entitling me to exercise my cancellation rights under Paragraph 14G of the RPA and to pursue all available remedies for your breach.
Demand and Deadline
I hereby demand that you: (1) Immediately take all steps necessary to close escrow, including [SPECIFIC ACTIONS REQUIRED]; and (2) Pay all damages I have incurred as a result of this delay, currently totaling $[TOTAL DAMAGES], plus ongoing per diem damages of $[DAILY AMOUNT] for each additional day of delay. If escrow does not close by [NEW DEADLINE], or if you fail to respond to this demand within [NUMBER] days, I will exercise my right to cancel the transaction, demand return of my earnest money deposit, and pursue all available legal remedies, including a claim for damages and attorney fees under California Civil Code 1717 and the terms of our purchase agreement.
Mediation Notice
Please be advised that pursuant to Paragraph 25C of the Residential Purchase Agreement, I am prepared to participate in mediation as required before pursuing arbitration or litigation. However, the mediation requirement does not excuse your obligation to perform or compensate me for damages. I am requesting that we proceed to mediation promptly if this matter is not resolved within [NUMBER] days of this letter. Please contact me or my agent to confirm your intent to either perform or participate in mediation.

🚀 Next Steps

What to do when facing a closing delay or after sending your demand letter.

Immediate Actions

Step 1: Document the Delay

Send written communication to all parties (agents, escrow, other party) confirming the missed closing date and requesting explanation. Create a paper trail from day one.

Step 2: Issue Notice to Perform

Use CAR Form NBP (Notice to Buyer to Perform) or NBS (Notice to Seller to Perform) to formally demand performance within the specified timeframe (typically 2 days). Deliver with proof of receipt.

Step 3: Track All Damages

Begin documenting all costs incurred due to the delay - save every receipt, invoice, and confirmation. These prove your damages claim.

Step 4: Send Formal Demand Letter

Using the sample language above, send a formal demand letter to the breaching party demanding performance and compensation for delay damages.

Step 5: Evaluate Options

Decide whether to extend closing (if other party cures), cancel and pursue damages, or negotiate a resolution. Consult with your agent and/or attorney.

If They Fail to Perform or Refuse to Pay

  1. Cancellation of Contract

    If the Notice to Perform expires without cure, you may cancel the contract using CAR Form CC (Cancellation of Contract). Follow the form instructions exactly and deliver with proof of receipt.

  2. Demand for Deposit Return

    If you are the buyer canceling due to seller breach, demand immediate return of your earnest money deposit. Use Civil Code 1057.3 procedures if the seller refuses to sign release instructions.

  3. Mediation (Required)

    Under the CAR RPA, you must mediate before arbitrating or litigating. Contact a mediation service and formally request mediation. Failure to mediate can result in loss of attorney fee recovery.

  4. Arbitration or Litigation

    If mediation fails, check whether your contract requires binding arbitration (Paragraph 25B). If arbitration was initialed, you must arbitrate. If not, you may file suit in court. For claims under $12,500, small claims court is an option.

⚠ Do Not Skip Mediation

The CAR RPA requires mediation before any claim can be filed. Under Paragraph 25C(2), if you file an action without first attempting mediation in good faith, you lose the right to recover attorney fees - even if you win the case. Always comply with the mediation requirement first.

Need Legal Help?

Closing delays can be complicated. Get a 30-minute strategy call with an attorney to evaluate your situation and discuss your options.

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California Resources

  • CA Dept. of Real Estate: dre.ca.gov - File complaints against licensees
  • California Civil Code: leginfo.legislature.ca.gov - Contract and damages statutes
  • CAR Forms: car.org - Standard purchase agreement and notice forms
  • Small Claims Court: courts.ca.gov/selfhelp-smallclaims.htm - For claims under $12,500
  • State Bar Lawyer Referral: calbar.ca.gov - Find a real estate attorney
  • Mediation Services: ADR providers like JAMS, AAA, or local bar association panels