What to do if I’m purchasing a business from a seller and am in the middle of escrow but he has informed me that he has changed his mind and is looking to cancel on the sale?

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What to do if I’m purchasing a business from a seller and am in the middle of escrow but he has informed me that he has changed his mind and is looking to cancel on the sale?

I’ve already deposited $10,000 into escrow and spent around $1500 for other licensing and business fees. There is a “liquidated damages” contingency that states in the case that the seller defaults he must provide the $10,000 less the escrow fees (estimated $1000-$2000). I’m reluctant to get an attorney because I feel the attorney fees would just add to the sum of money I am currently looking to lose. The escrow has stated they will not be responsible for anything that happens in this case.

Asked on August 1, 2015 under Business Law, California

Answers:

S.L,. Member, California Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

You can file a lawsuit for breach of contract against the seller.  Your damages (monetary compensation you are seeking in your lawsuit for breach of contract) would be the liquidated damages ($10,000 - escrow fees).  If you prevail in the lawsuit, you can also recover the court filing fee and process server fee.


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