Close Menu

What Happens if a Seller Refuses to Close Escrow?

Lady holding papers with escrow sign as seller refuses to sign closing papers

Perhaps you’ve been searching for the ideal property to purchase for months, and you’ve finally landed on a house that is in the location you want and is priced fairly. Your offer was accepted, and you’ve made it through weeks of escrow, only to encounter a seller who refuses to close escrow. This is a frustrating problem, but one with clear-cut solutions that a seasoned real estate attorney can provide. Read on to learn about your options when a seller refuses to sign closing papers. 

Why do sellers refuse to close escrow?

There are several common reasons why a seller would refuse to close escrow on the agreed-upon date. Often, the seller might believe that changes in the market mean that they could get a higher price for their property than the offer they accepted from you. Another common reason is that a seller who is currently occupying the home has been unable to find alternate housing by the closing date and remains in the home. Finally, a seller may refuse to close on a sale if they have failed to complete all the repairs required under the terms of the contract for sale. It’s important to keep in mind that none of these reasons justifies a refusal to perform under the contract by closing escrow and vacating the property. 

What can buyers do about a stubborn seller?

Buyers who have entered into a valid contract for sale have options for how to respond to a seller who refuses to close escrow. If it appears that the seller won’t close escrow because they are holding out for a higher offer, buyers might consider filing a lawsuit and recording a lis pendens. Most contracts for the sale of real estate include a provision for mandatory mediation (an out-of-court conflict resolution process) prior to taking action in court. However, if you are concerned that the property will be sold out from under you, filing a lis pendens alerts potential buyers that there is currently a legal action against the seller regarding that property, essentially putting a cloud on the title. This is a relatively quick way for the buyer to prevent the seller from reselling the house while parties spend weeks or months scheduling and carrying out a mediation session, as it can be done as soon as the seller does not perform by the scheduled date. Buyers almost always have a right to what’s known as specific performance of the sale contract, meaning that the seller must simply perform their end of the contract by closing escrow. An experienced real estate attorney can handle these filings and can represent you in a subsequent mediation or court case. 

For assistance with a legal issue related to a California real estate purchase or dispute, contact the seasoned and knowledgeable San Diego real estate litigation attorney Jon Alan Enochs for a confidential consultation at 619-421-3956.

Facebook Twitter LinkedIn Google Plus

© 2017 - 2018 Jon Alan Enochs, Attorney at Law. All rights reserved.