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What Happens When An Unhappy Principal Simply Refuses To Sign Documents?

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Sunday, June 21, 2015

Many of us have experienced clients who were so upset about something gone wrong in a transaction that they no longer wanted to have anything to do with it. Really -- just a refusal to participate in any way. Back is turned. Arms are folded. Fists are clenched. They wont sign cancellation instructions, wont sign for return of deposit, wont sign a grant deed, nothing. Whatever needs to be done, they are not going to do it.

Well, what happens then? Can a court, make them sign a document? Not really. The court might punish someone for not signing; but that is a different issue. It doesnt get the document signed. But what the court can do is to appoint someone else to sign on their behalf. The case of Blueberry Properties v. Esther Khoe Chow California Second Appellate District, Oct. 22, 2014 is instructive.

In June of 2011, Ms. Chow entered into an agreement to sell her apartment complex in Los Angeles. However, as sometimes happens, she subsequently changed her mind. She even returned the deposit money that Blueberry had placed into escrow. But Blueberry was not in agreement with her change of heart. Blueberry went to court and sued for specific performance. In July of 2012, the parties entered into a settlement whereby Chow agreed to sell the property to Blueberry in accordance with the terms of their original agreement. Unfortunately, Chow failed to comply with the settlement. She withheld her signatures from the documents necessary to reopen and complete the sale.

Back to court. This time the court issued a judgment which, among other things, said "Esther Chow [is] ordered to do all things necessary and to execute all documents necessary to consummate the sale by Defendant, Esther Chow to Plaintiff, BLUEBERRY PROPERTIES" Alas, Ms. Chow again refused to sign the escrow documents..

This time Blueberry went back to the court and asked for an order appointing an elisor. An elisor is someone the court appoints to sign and/or act on behalf of some other person. The court issued such an order. So Ms. Chow appealed the appointment of an elisor.

The Second Appellate District Court didnt think much of Ms. Chows arguments and/or behavior. They upheld the order appointing an elisor. Ms. Chows signatures are no longer needed.

Commenting on this case in the California Real Estate Law newsletter, attorney Julia Wei says: "The Buyers right to specific performance is nearly absolute and though the remedy may take a number of litigation efforts to enforce, the Seller does not actually need to sign any of the documents in order for the transfer of the property to occur."

Bob Hunt is a director of the California Association of Realtors. He is the author of Real Estate the Ethical Way.

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