A California buyer and seller are in dispute over the release of a $40,000 earnest money deposit after the buyer defaults. Both parties have signed cancellation instructions but disagree on how the deposit should be split. Under California Civil Code §1057.3, what happens to the disputed deposit if neither party can reach agreement?
Correct Answer
A) The escrow company must file an interpleader action or follow the statutory release process after 30 days of the dispute
Under California Civil Code §1057.3, if the parties to a real estate transaction dispute the disposition of an earnest money deposit and the escrow holder receives conflicting demands, the escrow holder may file an interpleader action with the court. The statute also provides a specific process where the escrow holder may release funds if one party provides a written demand and the other party does not object within 30 days.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A time is of the essence clause in a contract means that all deadlines and dates specified in the agreement are strictly enforceable, and failure to meet them constitutes a material breach.
An appraisal contingency allows the buyer to cancel or renegotiate the contract if the property's appraised value comes in lower than the agreed-upon purchase price. This contingency protects buyers from overpaying.
An assignment of contract transfers one party's rights and obligations under a contract to a third party called the assignee. The original party, known as the assignor, transfers their contractual position to someone who was not originally part of the agreement.
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