I am currently in the process of buying a home. A deal was made and we are now waiting for funding to close. There has been a theaft on the ...

Question

I am currently in the process of buying a home. A deal was made and we are now waiting for funding to close. There has been a theaft on the property and said property is no longer as it was when the deal was made. Besides walking away from the deal what right do I have to make the seller repair the home to the agreed condition?

Answer

You could go through with the deal and then sue the seller for the cost of repair on the basis that what is being sold is less than what was agreed to, but filing such lawsuits is never a good economic solution because you would probably hire an attorney and with court costs might only get 70% of the value of the repairs required. It is best to get another inspection and lower the sale's price by the cost of repair.

Answer

You need to consider the doctrine of equitable conversion, which may make the buyer the equitable owner of the property from the time the deal is signed and before the closing date. I'm not sure this will affect the net result, but it should be taken into consideration, as it may.

A quotation from the case of Town & Country Title Services, Inc. v. Martinez (2007) follows:

"This doctrine provides that when a binding executory contract for the sale of real property is entered into, an equitable conversion occurs whereby the buyer is deemed the equitable owner of the property and the seller is deemed the owner of the purchase money, with an equitable lien on the property for the balance of the unpaid purchase price. (Mamula v. McCulloch (1969),275 Cal.App.2d 184.) The seller is regarded as holding the legal title in trust for the buyer, and the buyer is considered the trustee of the purchase money for the benefit of the seller. (Id. at pp. 193, 194.) If the buyer performs all conditions precedent that entitle him under the purchase agreement to a conveyance of the property on a given day, he will be considered the owner of the property on that day, and the seller will be regarded as the owner of the purchase money. (Ibid.) The fact that the seller refuses to perform his part of the purchase agreement and refrains from making the conveyance to which the buyer is entitled on compliance with the provisions of the agreement does not affect the status of the parties or their rights in the property. (Ibid.) When a buyer has performed or offered to perform his covenants, he will be treated in equity as the owner of the property from the time provided in the purchase agreement for conveyance of the property, and the seller will be regarded as merely holding the legal title to the property in trust for the buyer. (Ibid.) Stated more concisely, "[a]n unconditional contract for the sale of land, of which specific performance would be decreed, grants the purchaser equitable title, and equity considers him the owner. [Citations.]'" (Rogers v. Davis (1994),28 Cal.App.4th 1215.)"

Also, look up "equitable conversion" on Google. Here's an example:

http://fountainoflaw.com/Vocab/DEC.html

I believe California statutes have modified the doctrine of equitable conversion somewhat, but that's not showing up in the cases I looked at and I didn't find it in the books I keep at my desk....... I'll search a bit further and post a second answer if I find anything pertinent.

The bottom line is that the buyer might be responsible for damage to or destruction of the purchased property before closing, particularly if the damage is due to third parties, acts of God, or the passage of time rather than deliberately done by the seller.

Answer

I'm also concerned about the doctrine of equitable conversion, as mentioned by Mr. Whipple. What that means is if you are in a binding contract to purchase the real estate, you bear the risk of loss as the buyer, as if you were already the owner.