Purchase Agreement Contract expired

[Monique Pope]

I entered into a purchase agreement to sell my home on May 2018, Riverside County, CA (to a local real estate agent who owns his own property management company). I am married but was the only person on the deed / title. My husband and I filed legal separation through this process and the only way I could sell the home was to either buy him out or wait until the procedures were over. He agreed to a buy out and changed his mind prior to closing (July 2018). His reasoning was that he didn't trust me or the buyer because the buyer stated we would complete the closing but loan would remain in my name until he was able to find a buyer. I was told this was standard and the buyer put it in email. Informed the buyer and the purchase was placed on hold until I was able to resolve the issue with my estranged husband. I re-entered an agreement with the buyer (he threaten to sue me) for 3 months. The day of contact expiration November 26, 2018, he informed me he wanted he had a buyer and needed me to sign some documents. He sent them over but I was confused since this seemed to be a new contract. we extended the previous contract adding a three month extension. I thought I should only be signing closing documents. He informed me that he had assigned his interest to buy to someone else and I would be selling to them. I was still confused for a number of reasons:

1) I receive no documentation informing me that he was signing his interest to another party

2) The purchaser sent me a completed California Residential Purchase Agreement and Joint Escrow Instructions with individuals with new buyers and the previous buyer listed as broker

3) When I asked the Original buyer additional information about the new contract - he threaten to sue me for breach of contract because he stated I was refusing to sell

4) I didn't understand this new agreement - so I wasn't willing to sign any documents until I had a better understanding

5) The new agreement (CRPA) stated a deposit was rendered and other things about that I would be responsible for which I wasn't under the original purchase agreement

6) I didn't have any contact with the new buyers and was only able to continue talking to the purchase buyer.

About two weeks after much back and forth, me and the original buyer decided that I would not be moving forward with the buyer he had identified and the house will remain on the market. Since my now expired extended purchase agreement contract had expired, I sent the original buyer an email stating that I did not want to enter into a new contract and I would extend the option for him to purchase my home to February 18, 2019. He didn't respond. I sent home another email in January 26, 2018 extending his option to purchase my home until March 01, 2019 because I have been getting a lot of showings. The original buyer stated that the house will stay on the market until its sold.

My questions: Is this legal? Will I be in breach of contract if I refuse? I feel like this guy has continued to take advantage of the fact that I know nothing about real estate, law and I am on a limited income. My home is not in default. I am wanting to sell to relocate. Any advice?

[Alan Johnson]

@Monique Pope Based on your thread comments, it appears that there are two separate agreements to consider:

• The option to purchase agreement you signed originally, and
• The CRPA to be executed when the option is exercised.

Here are a couple of things to consider bringing up when you head into court (BTW, I am not an attorney and I know nothing about California statutes regarding real estate purchase option agreements).

In general, for an option agreement to be valid it should have:

1. A specified period of time that the agreement is in force (which yours appears to have), including the conditions under which the time period may be extended,
2. A fixed selling price for the property while the option agreement is in force,
3. A clearly defined method for exercising the real estate option, and
4. Valuable consideration paid to you in return for being obligated to sell the property during the time the option is in force.

Regarding point #3, execution of the CRPA could be part of the "clearly defined method" for exercising the option agreement. I gather from your thread comments, however, that this "new" agreement was something you had not been aware of.  Typically in an option agreement there is wording something like this:

"If this option to purchase is exercised, both parties will execute the purchase and sale agreement attached as Exhibit 1."

Were words to this effect included in the original option agreement?  And, if so, was an actual pre-populated agreement attached (as opposed to saying something like "both parties will execute a standard CRPA")?  If either of these conditions were not met, you may be able to get the court to invalidate the original option agreement.

Regarding point #4, you should have received "valuable" consideration for having entered into the option agreement.  Typically this amount of money would be in the range of, say, 1% - 5% of the value of the property.  Did you receive this money at the time you signed the option agreement?  If not, again you may be able to get the court to invalidate the option agreement.

If you did receive money, a) how much did you receive, and b) were there "strings attached."

In a) for example, if you received $10 consideration on a property worth $100,000 the court may likely rule that this is not "valuable" consideration, and may therefore invalidate the agreement.

In b), if there were conditions on you receiving this consideration (for example, money credited at closing, money for option consideration held in escrow, etc) the court may rule that the other party did not fulfill his end of the agreement by actually giving you "valuable" consideration at the time the agreement was executed.  This might also allow the option agreement to be invalidated.

Again, these are just some concepts and ideas to consider; I hope they help.