A California real estate licensee is preparing for a closing. The buyer asks what happens if the seller cannot deliver clear title on the closing date. Under typical California purchase agreements, what remedy does the buyer have?
Correct Answer
C) The buyer can cancel the contract and receive a full refund of the earnest money deposit
Under the standard California Residential Purchase Agreement (RPA), if the seller cannot deliver marketable title as required by the contract, the buyer has the right to cancel the agreement and receive a full refund of the earnest money deposit. The seller's inability to deliver clear title is a failure of a material condition of the sale.
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Previous Question
A California buyer purchased property via grant deed from a seller who had acquired title through a tax sale. The buyer obtained a CLTA standard title insurance policy at closing. Five years later, the original owner challenges the tax sale, alleging defective proceedings that are evidenced by irregularities in the recorded tax sale documents. Under a CLTA standard policy, what is the title insurer's obligation?
Next Question
Diana discovers that the seller of her California home forged a deed from the previous owner to himself before selling to her. Diana's CLTA title insurance policy was issued at the time of her purchase. Even though Diana acted in good faith, the true owner demands return of the property. Under California law, which statement is MOST accurate?