When A Property Buyer Fails To Complete The Sale, A Seller With One-Half Interest In the Property Is Entitled To Keep All Of The Buyer’s Forfeited Deposit

In Felder v. Grigsby, (— Cal.Rptr.3d —, 2008 WL 4514877, Cal.App. 2 Dist., Oct. 9, 2008), a California Court of Appeal considered an appeal from a buyer of a property, who forfeited his deposit when he was unable to complete the transaction, but who asserted that a seller with a one-half ownership interest in the property should be able to keep just one half, rather than all, of his deposit.

The court ruled the law provides that when a buyer fails to complete a transaction, the seller is entitled to keep amounts up to the difference in the agreed-to sale price and a subsequent sale price, plus additional costs incurred as a result. In this case, since that total exceeded the amount of the deposit, and the law makes no provision capping part-owners’ shares based on their percentage of ownership, the seller was legally entitled to keep all of the buyer’s forfeited deposit.


The Estate of Richard Felder (“Estate”) owned a one-half interest in a parcel of real property. The estate and the other half-owner agreed to sell the property to John Grigsby for $480,000, with half, or $240,000, payable to the estate. Grigsby paid a deposit of $48,000 toward the purchase, but was then unable to complete it. The property was eventually sold for $368,500, with $184,250 payable to the estate. The estate’s share of the sale proceeds had therefore been reduced by $55,750, and the estate had also incurred an additional $3,800 in expenses, resulting in a total loss to the estate of $59,550. The probate court judge ruled that since that amount exceeded Grigsby’s deposit, the estate was entitled to keep the entire $48,000. Grigsby appealed.


This was a case of statutory interpretation, the court said, and the meaning of Probate Code Section 10350 is clear. It provides that after the confirmation of a property sale, if the purchaser fails to comply with the terms of the sale, the seller is entitled to damages equaling the sum of the difference between the first and subsequent sale prices, expenses made necessary by the purchaser’s breach, and other consequential damages.

It was undisputed that Grigsby agreed to the purchase and then failed to adhere to its terms, the court said. Section 10350 unequivocally allows the probate court to award damages equal to the difference in the prices plus expenses, and contains no language consistent with Grigsby’s assertion that a seller with a partial interest in the property is only entitled to a pro rata share of that amount.

The probate court’s award of the entire forfeited deposit to the estate was affirmed.


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