BiggerPockets

... then the late Aaliyah would advise you to dust yourself off and try again.

But how does this work with regard to selling your flip to your end user? If your first buyer is not able to obtain financing (fairly commonplace) yet refuses to sign a cancellation (less common), then what do you need to do to sell the property? Can you simply open escrow (presumably with a different escrow company that has no knowledge of your first escrow) again and close it like there isn't somebody with a claim to the property?

Do you open yourself up to (non-frivolous) litigation by doing this? Is the claim the first buyer has to the property valid? Would the second escrow company have any trouble recording the closing (I'm thinking this would be the case if a Lis Pendens is filed)?

If any of you have previously dealt with this, would be great to hear about your experience.

July.

Of course they're in breach. No one is debating that.

I guess I should have prefaced it by saying the property is in CA, the land of bilateral cancellations (and no closing attorneys). The escrow company is a neutral party, so they're not really allowed to have an opinion.

If the contract stated July was the end date. And you BOTH agreed to that date to close by, then that seems pretty bi-lateral to me. I may be seeing why California is such a rough place to do business.

@Jake Kucheck That sounds insane. Since your the seller and they presumably put up the deposit, no reason to worry about it. As far as getting it sold being that your a real estate agent I would speak to your broker about the situation. I imagine that it must be fairly commonplace. You could also speak with the board of realtors. Here in Florida realtors have access to an attorney for questions free of charge, you might check that out to. Lastly if your working with an experienced title company I would think they could give you some advice as to how to handle it.

Jake isn't having a contract issue, he's having an escrow issue in CA. Escrow here will not usually cancel an escrow, even if the terms of the contract provide for cancellation because of breach or failure to perform, without agreement in writing from both parties.

@Jake Kucheck Does your buyer still plan/want to buy? Will they release if you refund their EM in full? Why haven't they received at least a letter from your attorney stating they are in breach and to release? Why haven't you filed an LP?

I misunderstood. I didn't understand that you have new buyer in place. You are holding out for keeping EMD when you have a buyer in place and ready to close? How much EMD are we talking about? Is it just the principal of thing? The only times I've been able to keep EMD is when the other party agreed that they owed me for keeping the property off the market. Not sure how much EMD would be worth suing for....if it's $10K or less, I'd let it go and get the deal done with the new buyer.

I Agree

I have no good advice except to say that I'm pissed off for you. Ugh.

Do you have grounds to sue for punitive damages, as the first buyer is essentially blackmailing you by not allowing you to sell unless he gets his EM back.

Is the broker for the first buyer willing to do anything?

I have to imagine this happens all the time. What if the buyer refused to ever sign a termination agreement, no matter what? There has to be some recourse, I would think.

@Jake Kucheck Have you spoken to your broker or title company about it? I would think either of them would have plenty of experience with this. Also your broker may be able to put some pressure on the broker for the buyer. As I said before I'm sure real estate board could give you some advise and probably provides free telephone access to a real estate attorney. I'm interested to know how it's handled when you clearly are owed the deposit by the contract but the seller is holding it up. As @J Scott said I'm sure there is some recourse. You have to decide whether the deposit is worth the time, hassle, and possibly money up front to get it resolved. Maybe you can make a deal with them and give back a portion of it to get it taken care of now rather than later. You should use the in state resources your license provides. Keep us updated.