A buyer deposits $10,000 in earnest money into escrow. The sale does not close by the date set in the purchase agreement, and the buyer makes a written demand on the seller to sign the mutual cancellation instructions the escrow holder needs before it can release the deposit. More than 30 days pass, and the seller, who has no good faith dispute over the money, still refuses to sign. Under California Civil Code Section 1057.3, what is the seller's exposure?
Correct Answer
A) Liability for the deposit plus damages of three times the amount withheld, which cannot be less than $100 or more than $1,000, plus reasonable attorney fees
Civil Code Section 1057.3 puts the duty on the buyer and the seller, not on the escrow holder. Once one party makes a written demand for the return of escrowed funds, the other has 30 days to execute the release instructions. A party who fails to do so is liable for the amount wrongfully withheld, for damages of three times that amount subject to a floor of $100 and a ceiling of $1,000, and for reasonable attorney fees. The treble damages do not apply where the funds are withheld because of a good faith dispute, which is why the fact pattern says there is none. The section expressly leaves the escrow holder free to file an interpleader action, but it never commands one.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Equitable title is the buyer's interest in a property after a purchase contract is signed but before closing, giving the buyer the right to acquire legal title in the future. The seller retains legal title until the deed is delivered at closing.
A financing contingency makes the purchase contract conditional upon the buyer obtaining mortgage approval within a specified time period. If the buyer cannot secure financing, they can cancel the contract and receive their earnest money back.
An inspection contingency gives the buyer the right to have the property professionally inspected within a specified time frame and to negotiate repairs or cancel the contract based on the findings.
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Specific performance in North Dakota:
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