A California purchase transaction falls apart and the buyer makes a written demand on the seller for return of the $40,000 deposit held in escrow. The seller, with no genuine dispute about who is entitled to the money, refuses for more than 30 days to sign the release documents escrow requires. Under California Civil Code §1057.3, what is the seller's exposure?
Correct Answer
C) Liability for the withheld funds, treble damages of $100 to $1,000, and reasonable attorney fees
Civil Code §1057.3 targets the party who sits on the money, not the escrow holder. A buyer or seller who fails to sign the documents escrow requires to release deposited funds within 30 days after the other party's written demand is liable for the funds not held in good faith dispute, for treble damages on that amount subject to a floor of $100 and a ceiling of $1,000, and for reasonable attorney fees incurred to enforce the section. The statute's safe harbor is a genuine dispute: there is no cause of action where the funds are withheld in order to resolve a good faith disagreement. The section also leaves the escrow holder free to interplead the funds, but it does not require escrow to do anything.
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Related Topics & Key Terms
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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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