Buyers of Timney v. Lin, (2003) 106 Cal.App.4th 1121, were able to argue that their deposit was an illegal forfeiture. The case is unique because it revolved around a transaction contract, the buyer required to file a deed of termination in a fiduciary deposit within five days of the reference date. The purchasers deposited 31,250 $US in trust, but did not file a deed of termination in a timely manner, which led to the forfeiture of their deposit as part of the agreement. The court imposed the transaction contract and allowed the sellers to withhold the bond. [4] On appeal, the Court of Appeal set aside the sellers` attempt to withhold the bond because the sellers had „no apparent damage“. Id. at 1128. The sellers did not provide evidence in court proving damages by the delay and cancellation of the purchasers. The court refused to consider damages solely because the house could be kept off the market for three weeks.

As a result, the ability to retain the down payment was an undue forfeiture of the buyers` property. When this clause is signed, this clause requires the buyer, if he violates the terms of the contract, to waive the lower part of his down payment or 3% of the purchase price (if the property is less than 4 units). If the liquidation clause of a non-residential contract meets the formal requirements set out in Section 1677, it is valid unless the party intending to invalidate the provision establishes that the provision was inappropriate in the circumstances at the time of the contract. In addition to the circumstances surrounding the contract, the Act (Civ. Code 1675 (e) (2)) requires consideration of a subsequent sale within 6 months. The Smith case does not allow a seller to benefit from the liquidated indemnity clause if the house sells for more money than the original sale. Here, in our hypothetical, seller sold the house in a month or something of cancellation, for a profit, well within the legal time frame. Like the sellers at Smith, the seller took advantage of the buyer`s cancellation.

Since the seller benefited from it, the application of the liquidated clause should be inappropriate. (Note: costs and costs remaining to be paid to third parties may be incurred.) If the parties initially found the liquidation clause, the seller is capped at what, in some cases, can be recovered with the amount of the down payment or 3%. The contract and the law stipulate that if the RPA for a dwelling of less than 4 units, which must be a principal residence of the buyer, then the liquidated damage is limited to 3%. In other words, if a seller has repair, moving/moving costs, new rents, etc., and the buyer then violates the contract, none of the actual damages suffered by the seller could be compensated. In some situations, this cap may place the seller in a less favourable position, since the limited amount of liquidated damages is available, so the seller must take care of the amount of the trust`s surety. (b) a provision of a contract to purchase and sell homes; which provides that all or part of a payment made by the purchaser constitutes liquidated damage to the seller if the purchaser has not entered into the purchase of the property, is valid to the extent that the payment is made in the form of cash or cheques, including a predetermined check, if the provision complies with the requirements of sections 1677 and 1678 and is subdivided (c) or d) of this section.

72total visits,1visits today