Seller is trying to cancel a sale and threatening litigation

[Dan B.]

I find myself in a real estate purchase conundrum. BLUF: seller is trying to cancel our contract to buy and threatening litigation.

A bit of background, wife and I put an offer on this house. The process was going along fine, until we get to the inspection report, which says it needs a new roof. We got an estimate and requested a credit for the roof replacement. This was the same day noted as the inspection contingency removal (tuesday evening). Seller countered there would be no repairs, and sent a notice to perform (wednesday morning).

I countered with a compromise of half the roof repair, and it was crickets from the seller. Thursday evening, we get a cancellation notice. My realtor tells me its invalid because it was sent prior to midnight when the notice to perform would expire. We replied with a removal of the inspection contingency, and will buy the house as-is. All contingencies have been removed at this point.

Seller is still trying to cancel. They even offered $10k plus the costs of inspection, and $5k to our realtor. This is well above the cost of the roof credit we asked for.

In the last email received, the seller's realtor threatened litigation, and noted they were confident they would win, and we'd be responsible paying their legal fees. The seller realtor also noted the neighborhood was dangerous, and encouraged us to take the $10k to walk away, which my realtor tells me is "steering," which is illegal. I just dont want to go back to square one in this competitive housing market.

Does this seller have a legal justification to cancel the sale and to take me to court? J dont have any legal background, but I dont see how they have a legal leg to stand on here. My realtor has contacted the California Association of realtors legal attorney, and they say we are still under contract. Does anyone see how I can lose and be stuck with paying attorney fees?

[Charlie MacPherson]

@Dan B.  A few things stand out.  With regard to the repair request, the seller is under no obligation to accept.  Unless you sent a timely cancellation based on the inspection, the purchase contract stands.  That's worth checking with an attorney as there may be some quirks in CA law.

The fact that they're offering $10K to you and $5K to your Realtor strongly suggests that they have a much better offer. 

The offer of $5K to your agent might open up additional liabilities.  Maybe "tortious interference with contractual relations"?  Maybe improper / unethical attempts to influence?  Maybe simple bribery. 

If the defense attorney offers to pay the prosecutor, the court will shred that attorney along with his (former) career.

The seller's Realtor talking about how the neighborhood is dangerous opens him up to charges of discrimination, part of which is covered under "steering".  (BTW, if the neighborhood is so bad, why isn't he anxious to get this horrible property sold?)

The seller's Realtor is trying to scare and bully you. You might, through your own agent, remind him of his ethical obligations under the Realtor Code of Ethics (honest and fair dealing), CA State law and Fair Housing. You might also suggest that he keeps his E&O insurance up to date. (Side note - some E&O policies severely limit coverage for Fair Housing violations.)

I would have your agent make a call to his managing broker.  A smart broker will give him the biggest dope-slap he's ever had and will work to get the deal done for you.  The broker doesn't need this kind of crap, the bad reputation or the hit to E&P premiums after a payout.

Your next steps are complaints to the local Board of Realtors and then to the state regulators.

Document everything and keep contemporaneous notes.  You may end up needing them.

Anybody can sue for anything, but it seems to me that this is just a seller who got a much better offer and is trying everything he can think of to get out of a valid, signed contract.  In this case, "no" is a complete sentence.