Home sellers and buyers entered into a real estate contract in California. The contract included contingencies for appraisal, inspection and loan approval. After all contingencies were met, the buyer's agent said that he was going to send the forms for removal of the contingencies, but he never followed through. The day after the scheduled closing date, the buyers agent called and said that the buyers did not have the money and would not be purchasing the home.
The buyers then claimed that they did not initial the liquidated damages clause in the purchase contract, and claim that their real estate agent told them not to initial that clause because he knew they might have trouble coming up with the money. They say that he told them that if they did not initial, they could cancel at the last minute and still get their entire deposit back, even though the contingencies were met.
As they were put into financial difficulty by the unexpected cancellation, the sellers accepted an offer that was lower than the buyers' had committed to paying. Can the sellers keep the deposit or sue for breach of contract?