The purchase or sale of a significant California property — a coastal home, an apartment building, a commercial asset — concentrates an enormous amount of money into a transaction that closes in weeks. When something goes wrong, it tends to go wrong expensively: a defect surfaces after closing, a party refuses to perform, or a seven-figure deposit hangs in escrow between two parties who each believe it’s theirs.
These disputes are winnable — for the party who understands the legal framework and moves quickly. Here is how the most common ones work.
After Closing: Nondisclosure and Fraud Claims
California imposes some of the nation’s strongest disclosure obligations on sellers of real property. For most residential sales, sellers must complete a statutory Transfer Disclosure Statement and related disclosures. But the duty runs deeper than the forms: under long-established California law, a seller (and, in many circumstances, the brokers) must disclose known material facts affecting the value or desirability of the property that the buyer cannot reasonably discover — and that duty applies to commercial and investment property as well, where intentional concealment and misrepresentation remain fully actionable even without statutory disclosure forms.
Common post-closing claims involve concealed water intrusion and drainage problems, unpermitted construction, soil and slope instability, boundary and easement issues, neighbor disputes the seller knew about, and — in income property — misrepresented rent rolls, tenant defaults, and deferred maintenance.
What “as-is” really means. Sellers frequently believe an “as-is” clause ends the analysis. It does not. In California, an as-is sale generally shifts the risk of unknown defects — it does not shield a seller who actively concealed or misrepresented known material problems. Fraud vitiates the contract’s protections.
Remedies can include compensatory damages (often measured by the cost of repair or the difference between price paid and true value), rescission of the transaction in appropriate cases, and — for intentional fraud — potentially punitive damages. Brokers and inspectors may have independent liability.
The clock matters. Fraud claims in California generally must be brought within three years of when the buyer discovered, or reasonably should have discovered, the facts constituting the fraud. Buyers who “monitor the situation” for a couple of seasons of rain can litigate the discovery date instead of the merits. If you suspect concealment, investigate now.
Before Closing: When a Party Refuses to Perform
If the seller won’t close. Real property is legally unique, which is why California courts will order specific performance — compelling the seller to convey the property — where the buyer was ready, willing, and able to perform. For a buyer who negotiated a favorable price or needs that asset (an adjacent parcel, a 1031 exchange target, an irreplaceable location), specific performance is often more valuable than damages. A properly recorded lis pendens protects the buyer’s position by clouding title against a sale to anyone else while the case proceeds — a powerful, and fast, source of leverage.
If the buyer won’t close. The seller’s remedy usually starts with the deposit. California purchase agreements commonly contain a liquidated damages provision entitling the seller to retain the deposit on buyer default — subject to statutory requirements and limits, particularly in residential transactions. Where liquidated damages don’t apply or don’t cover the loss, sellers may pursue actual damages, typically the difference between the contract price and the property’s value (or resale price), plus consequential costs.
Deposit fights in escrow. When a transaction collapses, escrow will not release a contested deposit without mutual instructions or a court order — and buyers and sellers rarely agree on who breached. Contingency removals, extension amendments, and the email trail between agents usually decide these cases. Preserve all of it, and be careful what you write while the dispute is live.
The Documents Decide More Than the Testimony
Purchase agreement disputes are document cases. The standard California forms — with their contingency deadlines, notice-to-perform mechanics, mediation prerequisites, and attorney’s fee clauses — create a procedural chessboard:
- Attorney’s fees. Most standard forms award fees to the prevailing party — but condition that right on first attempting mediation. A party who races to court without offering mediation can win the case and still forfeit fee recovery.
- Contingencies and notices. Whether a contingency was properly removed, and whether the required notices were properly delivered, frequently determines who breached — regardless of who felt wronged.
- Arbitration. If both parties initialed the arbitration provision, the dispute may belong in private arbitration rather than court, with meaningful consequences for speed, cost, confidentiality, and appeal rights.
Frequently Asked Questions
We just discovered a serious defect. Should we contact the seller directly?
Not before you’ve preserved evidence and gotten advice. A well-crafted demand — with inspection reports and repair estimates attached — settles a meaningful share of these cases without a lawsuit. An angry email settles nothing and becomes Exhibit A.
The seller lives overseas / out of state. Can we still sue?
Yes. Disputes over California real property are litigated in California, and the property itself often provides both jurisdiction and a source of recovery.
How much are these cases worth?
It depends on repair costs, diminution in value, and whether the concealment was intentional. On high-value properties, credible nondisclosure claims are routinely six and seven figures — which is also why the defense side of these cases deserves equally serious representation.
Talk to a California Real Estate Litigation Attorney
Dracup & Patterson, Inc. represents buyers and sellers in purchase and sale disputes involving residential, commercial, and investment property throughout California — nondisclosure and fraud claims, specific performance actions, and deposit disputes, in court, arbitration, and mediation. Contact us for a confidential consultation. Call (833) 221-2990 or visit the consultation page to get started.
This article is attorney advertising and is provided for general informational purposes only. It is not legal advice and does not create an attorney-client relationship.