Earnest money deposits
Who keeps the deposit when a buyer cancels or fails to close.
- Real estate mediation
- Purchase & escrow disputes
Purchase, escrow, and earnest money dispute mediation
A failed sale leaves both sides stuck. The deposit sits in escrow, the seller cannot easily resell, and the buyer has lost time and inspection costs. Most standard California purchase agreements require the parties to try mediation before going to court, so mediation is often the required first step.
As an attorney I handle both sides of purchase transactions, and as an investor I buy and sell property myself. I know the contingencies, deadlines, and escrow mechanics these disputes turn on.
Purchase and escrow disputes I mediate
Contingency disputes
Whether a cancellation was timely and allowed under the contract.
Seller nondisclosure
Claims that a seller hid defects, permits, or neighborhood issues.
Specific performance
A buyer who wants the court to force the sale to close.
Repair credits and closing issues
Disputes over credits, walk-through findings, and post-closing repairs.
Title and escrow delays
Liens, title exceptions, and escrow errors that held up closing.
California rules that shape purchase disputes
- Mediation first
- Standard California Association of REALTORS® purchase agreements include a mediation requirement. A party who sues without first trying to mediate can lose the right to recover attorney fees.
- Liquidated damages
- For a residential property of one to four units the buyer intends to occupy, Civil Code § 1675 treats an agreed liquidated damages deposit of up to 3% of the price as valid.
- Releasing escrow funds
- Escrow generally needs signed cancellation instructions from both parties. Under Civil Code § 1057.3, a party who refuses in bad faith to sign a release can owe damages and attorney fees.
- Seller disclosures
- Sellers of residential property must deliver a Transfer Disclosure Statement under Civil Code § 1102 and following, and many disputes turn on what was disclosed and when.
This is general information, not legal advice. Each party should consult its own attorney about its rights.
What a purchase dispute settlement can include
- A split or full release of the deposit
- Mutual escrow cancellation instructions
- Closing on a revised price or credit
- An agreed repair plan
- Reimbursement of inspection or appraisal costs
- Mutual releases
Questions about purchase & escrow mediation
Is mediation required before suing over a home purchase?
If you used a standard California purchase agreement, it very likely requires mediation first. Check the dispute-resolution paragraph of your contract or ask your agent.
Can the earnest money be released through mediation?
Yes. If the parties agree on how to divide the deposit, both sign cancellation instructions and escrow releases the funds.
Can a buyer still force the sale?
Specific performance is available for real property, but litigation can take a year or more. Mediation can produce an agreed closing or an agreed exit much sooner.
Should the real estate agents attend?
Often, yes. Agents know the timeline and documents and sometimes contribute to a settlement. They can attend with the parties' agreement.