Appellant buyer sought review of the judgment of the Superior Court of Los Angeles County (California), which awarded respondent seller loss of bargain damages that were incurred when appellant breached the agreement to purchase respondent’s residential property.
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Overview
Appellant buyer advised respondent seller that he was not going to purchase respondent’s residence because he could not get financing. Respondent filed suit against appellant for specific performance and for damages. The trial court awarded damages. On appeal, the court reversed and remanded and held that with the execution of the sales agreement, appellant was obligated to use due diligence to obtain financing. The court held that the absence of a finding of fact with respect to appellant’s due diligence was reversible error. The court held that on remand, if the proofs remained the same, no prejudgment interest on loss of bargain damages should be awarded. If respondent was able to isolate expenses that were unnecessary to his use of the residence but were reasonably related to the process of resale, those could be charged to appellant. The court instructed the trial court to decide whether respondent’s purchase of a replacement property was foreseeable and reasonable, and, if so, the expenses connected with that residence between the time of the breach and the resale of the other residence were allowable on a showing that the resale was made in the shortest time possible.
Outcome
The court reversed and remanded the judgment for damages, which was awarded to respondent seller in respondent’s action for appellant buyer’s breach of an agreement to purchase respondent’s residential properly, and held that the trial court was required to and failed to make a finding regarding whether appellant had exercised due diligence in his promise to secure financing for the real estate before breaching the contract.