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California Civil Code Section 1057.3

Legal Research Home > California Laws > Civil Code > California Civil Code Section 1057.3

1057.3.  (a) It shall be the obligation of a buyer and seller who
enter into a contract to purchase and sell real property to ensure
that all funds deposited into an escrow account are returned to the
person who deposited the funds or who is otherwise entitled to the
funds under the contract, if the purchase of the property is not
completed by the date set forth in the contract for the close of
escrow or any duly executed extension thereof.
   (b) Any buyer or seller who fails to execute any document required
by the escrow holder to release funds on deposit in an escrow
account as provided in subdivision (a) within 30 days following a
written demand for the return of funds deposited in escrow by the
other party shall be liable to the person making the deposit for all
of the following:
   (1) The amount of the funds deposited in escrow not held in good
faith to resolve a good faith dispute.
   (2) Damages of treble the amount of the funds deposited in escrow
not held to resolve a good faith dispute, but liability under this
paragraph shall not be less than one hundred dollars ($100) or more
than one thousand dollars ($1,000).
   (3) Reasonable attorney's fees incurred in any action to enforce
this section.
   (c) Notwithstanding subdivision (b), there shall be no cause of
action under this section, and no party to a contract to purchase and
sell real property shall be liable, for failure to return funds
deposited in an escrow account by a buyer or seller, if the funds are
withheld in order to resolve a good faith dispute between a buyer
and seller. A party who is denied the return of the funds deposited
in escrow is entitled to damages under this section only upon proving
that there was no good faith dispute as to the right to the funds on
deposit.
   (d) Upon the filing of a cause of action pursuant to this section,
the escrow holder shall deposit the sum in dispute, less any
cancellation fee and charges incurred, with the court in which the
action is filed and be discharged of further responsibility for the
funds.
   (e)  Neither any document required by the escrow holder to release
funds deposited in an escrow account nor the acceptance of funds
released from escrow, by any principal to the escrow transaction,
shall be deemed a cancellation or termination of the underlying
contract to purchase and sell real property, unless the cancellation
is specifically stated therein. If the escrow instructions constitute
the only contract between the buyer and seller, no document required
by the escrow holder to release funds deposited in an escrow account
shall abrogate a cause of action for breach of a contractual
obligation to purchase or sell real property, unless the cancellation
is specifically stated therein.
   (f) For purposes of this section:
   (1) "Close of escrow" means the date, specified event, or
performance of prescribed condition upon which the escrow agent is to
deliver the subject of the escrow to the person specified in the
buyer's instructions to the escrow agent.
   (2) "Good faith dispute" means a dispute in which the trier of
fact finds that the party refusing to return the deposited funds had
a reasonable belief of his or her legal entitlement to withhold the
deposited funds. The existence of a "good faith dispute" shall be
determined by the trier of fact.
   (3) "Property" means real property containing one to four
residential units at least one of which at the time the escrow is
created is to be occupied by the buyer. The buyer's statement as to
his or her intention to occupy one of the units is conclusive for the
purposes of this section.
   (g) Nothing in this section restricts the ability of an escrow
holder to file an interpleader action in the event of a dispute as to
the proper distribution of funds deposited in an escrow account.

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Last modified: March 17, 2014