The Deal That Fell Apart After It Was Signed

It is one of the most common scenarios in Southern California real estate, and it tends to occur most frequently in rising markets: a buyer and seller reach agreement, the purchase contract is signed, escrow opens, and then — somewhere between acceptance and the scheduled closing date — the seller decides they want out.

The reasons vary. Sometimes a better offer materializes after the original contract is signed. Sometimes the seller realizes that property values in the neighborhood have climbed sharply since they agreed to the price. Sometimes a seller decides they simply do not want to move. Whatever the reason, the legal situation is the same: a binding contract exists, one party has performed or is ready to perform, and the other party is refusing to follow through.

In California, that is not the end of the buyer's options. It is the beginning of them.

Specific Performance: The Remedy That Forces the Sale

Specific performance is a legal remedy grounded in equity. Rather than compensating a buyer for the loss of a deal with money, it orders the breaching party — the seller — to actually perform their contractual obligation: to close escrow and transfer title on the agreed terms.¹

California Civil Code Section 3384 recognizes specific performance as a remedy for breach of contract. Section 3387 goes further — it establishes a presumption, specific to real property, that money damages are never adequate compensation when a seller refuses to complete a sale. The legal reasoning is that every piece of real property is unique. No other property is an exact substitute for the specific home, lot, or building a buyer agreed to purchase. Therefore, courts are not merely permitted to order specific performance in real estate disputes — they are presumed to favor it when the buyer's case is sound.²

What a Buyer Must Establish

To obtain specific performance in California, a buyer must demonstrate four things. First, that a valid, enforceable written contract exists — under California's Statute of Frauds, real property purchase agreements must be in writing and signed by both parties.³ Second, that the buyer has performed — or was and remains ready, willing, and able to perform — all of their obligations under the contract. Third, that the seller has breached by refusing to complete the sale without legal justification. And fourth, that money damages would be inadequate — which in residential real estate transactions, the presumption under Civil Code Section 3387 largely establishes by operation of law.²

The Lis Pendens — Why It Matters

A critical tool in a specific performance action is the lis pendens — a notice of pending legal action recorded against the property's title with the county recorder's office. Once a lis pendens is recorded, any subsequent buyer or lender who searches the title will find it. As a practical matter, the property becomes unmarketable: a seller cannot close a sale to another buyer while a lis pendens clouds the title, because that buyer would take the property subject to the pending litigation.⁴

This is not a minor tactical move. A properly recorded lis pendens effectively freezes the seller's ability to dispose of the property to anyone else while the specific performance claim is pending. Combined with the underlying lawsuit, it means the seller's options narrow considerably: settle with the original buyer on negotiated terms, or litigate to judgment.

The Full Range of Remedies Available to the Buyer

Specific performance is the most powerful remedy available when a seller backs out of a signed contract and the buyer still wants the property. But it is not the only option, and the right strategy depends on the buyer's goals and the specific circumstances of the breach.

The Process: From Breach to Closing

When a seller refuses to close, time matters. California purchase agreements typically contain mediation clauses requiring the parties to attempt mediation before filing litigation — with limited exceptions, including the right to file for the purpose of recording a lis pendens. Understanding the sequence of steps and what each one requires is essential to protecting the buyer's position.

When Sellers Attempt to Manufacture Grounds for Cancellation

Sellers who want out of a signed contract sometimes attempt to construct a justification after the fact — claiming a contingency was not properly removed, alleging a buyer missed a deadline, or asserting the purchase agreement was never fully executed. California courts examine these arguments carefully, and buyers who have maintained thorough documentation of their performance under the contract are typically well-positioned to defeat them.

The "Time Is of the Essence" Problem

Some purchase agreements contain "time is of the essence" clauses, which make deadlines material terms of the contract. A seller may attempt to use a buyer's technical failure to meet a deadline — even a minor one — as grounds to cancel. Whether such an argument succeeds depends on the specific contract language, whether the parties' conduct constituted a waiver of strict timing, and whether the seller provided the proper statutory notices before declaring the buyer in default.⁵

Under California law, before a seller can cancel a purchase contract based on a buyer's failure to perform, they must generally deliver a written demand to the buyer specifying the required performance and a reasonable time to comply. A seller who skips this step — or who declares a cancellation without proper notice — may find that their purported cancellation is itself a breach.

How DiJulio Law Group Handles Purchase Agreement Disputes in Southern California

Purchase agreement disputes in the Los Angeles and Glendale area require moving quickly and strategically. The legal tools available — specific performance, lis pendens, damages — are powerful, but their effectiveness depends on acting before the factual and legal picture is compromised by delay.

DiJulio Law Group has represented buyers and sellers in transactional real estate disputes and real estate litigation throughout Southern California for more than 35 years. When a seller refuses to close, we assess the contract language, the parties' performance, and the remedies available — and move immediately to protect the buyer's position, including recording a lis pendens when the circumstances call for it.

We also represent sellers who face specific performance claims and need to understand whether a purported basis for cancellation is legally sound, or whether a negotiated resolution is a more practical path. A seller facing a lis pendens and a specific performance lawsuit — in a market where their own attorney fees are also at risk — is in a very different position than they anticipated when they decided to walk away from the deal.

If you are involved in a purchase agreement dispute in the Glendale, Los Angeles, or Southern California area — whether as a buyer whose deal has fallen apart or a seller trying to understand your options — the time to get legal advice is before the situation escalates, not after.