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My wife and I signed a contract (not a standard CA purchase agreement)
to buy a house to be built from a small builder in Los Angeles area in
March, 2004. In July we found some undisclosed environmental hazards
in that area (Boeing/Rocketdyne Santa Susana lab. see
http://dtsc.ca.gov/SiteCleanup/Santa_Susana/), and really concerned to
move there.
Since we didn't want to lose deposit and options/upgrades (total over
$47k among which $20k is deposit), and figured even we buy it, we can
still sell it with possibly a profit, we first talked with sales
office about our intention to cancel the purchase, and then emailed
the escrow company and the sales office our conditional cancellation
request with the condition of the full refund. In a follow-up email
to escrow company, we specifically explained it's a conditional
cancellation and would go ahead with the purchase if the seller
refuses the full refund. Several days later, we sent our conditional
cancellation notice through the certified mail (as required per
purchase contract) to the builder and escrow company.
We fully expected that we would either get the full refund, or go
ahead with the purchase and later sell it. However the builder
instructed the escrow company to release all the money to him, and we
of course requested the escrow company to release all the fund to us.
Escrow company says the escrow will hold until the both party reaches
an agreement. Several days later the builder quickly sold the house to
another buyer (I don't know the price yet). The builder never
directly notified me orally or in writing about the cancellation until
we hired an attorney.
The builder first offered to return $20k after my first attorney
contacted him. We then switched to another attornery after our
mortgage broker recommended him to us. The 2nd (current) attorney
recommended us to file a lis pendens for the house, which we did. Now
the builder hired his attorney who offered to return $35k. We didn't
want to settle for that amount, so the builder just filed a motion
trying to remove the lis pendens, and we are waiting for what will
happen. If lis pendens is removed, we will go through mediation and
then arbitration, per contract.
Although my current attorney told me he had time to handle my case
when I hired him, he's been very busy and most of times can not return
my calls. He thinks we have little chance to keep the lis pendens,
because he thinks the judge will say "there is no such thing as
conditional cancellation", and "the request is not an offer to cancel,
but a notice". Also our points conflict with each other (on one hand,
to cancel, on the other hand, to buy). He also mentioned lis pendens
can only stay if the house is 'unique', but the contract says it's not
(tract house). But he said we could argue that after we signed the
contract, we did upgrade to meet our specific need, and hence it's
unique.
We believe we did nothing wrong, and would really appreciate any
suggestions or thoughts. For one similar case posted on internet, one
attorney suggests the best law suit may be againt the escrow company,
since they broke the trust and closed another escrow with another
buyer while it's still under contract.
Incidentally this very builder was "featured" on the very first page's
very first article on Los Angeles Times Real Estate edition in late
August. The article was about the "nightmare" of another couple who at
last moment found their house was sold to another buyer because the
builder says they did not submit the paper on time, but they said they
did.
John F.
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