Expert: Sue Bernstein - 12/26/2008

Question
The buyer for our house in northern California just canceled his purchase contract and asked for return of his deposit. He claims he is canceling because he will loose his job in February. A few weeks ago he signed an addendum in which he released all his contingencies, accepted the house "as is", and extended the close of escrow date. We signed the addendum and added and initialed a clause stating there would be no exceptions to the "as is" clause. All of the negotiations and paperwork have been accomplished by email.

The buyer's lawyer now claims (1) that the buyer's agent sent the signed addendum to us without the buyer's authorization and therefore it is not valid and (2) because we added to the addendum we made a new offer which invalidated the unauthorized addendum.

We believe that (1) the agent represented the buyer and would not have sent a signed document without the buyer's authorization and (2) if the buyer did not accept the additional clause, then the addendum as signed by the buyer remains valid since we accepted all of it without change. We therefore believe we are entitled to the buyer's deposit as liquidated damages.

The issues in this case may be too legal for you to comment on. If so, do you have access to a real estate lawyer who could give us a reading on the validity of our claim to the deposit money?

Thank you very much for whatever help you can provide.

Answer
Dear Mike,

By adding to the signed addendum after the buyer's signature you altered the agreement.  The buyer's never initialed your changes.  If they signed off on it being 'as-is' why did you have to make any additions? I agree with you that the buyer's agent was representing the buyer when they returned the contingency removal but you may have invalidated it by then further making changes.  I suggest you also consult an attorney or have your agent take it to the attorney representing your agent's brokerage.  You might also want to see if you can negotiate with the buyers.  The thing you want to do is get your house back on the market as soon as possible so you need the buyer to sign cancellation instructions which they won't do if you are in a fight over the deposit.

Hope this helps.

Sue Bernstein