A buyer and seller in California execute a purchase agreement for a home in Napa Valley. The contract includes a time is of the essence clause. The buyer fails to deposit earnest money by the deadline specified in the contract. Under California law, what is the legal effect of missing this deadline?
Correct Answer
C) The seller may treat the buyer's failure as a material breach and potentially cancel the contract
When a California real estate contract includes a 'time is of the essence' clause, deadlines are strictly enforced. The buyer's failure to deposit earnest money by the specified deadline constitutes a material breach, giving the seller the right to cancel the contract and potentially retain any deposits already made, subject to the contract terms.
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Previous Question
A California homeowner and a buyer agree to a land contract (contract for deed) for a property in Modesto priced at $380,000. Under California Civil Code §2985, what unique protection does the buyer receive in this type of arrangement?
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A California real estate agent drafts a purchase agreement that includes a clause stating: 'In the event of a dispute, the prevailing party shall be entitled to reasonable attorney's fees.' The agent is later asked whether this clause is standard in California residential real estate transactions. Under California law, what is the MOST accurate response?