“Don’t Walk Away” – When a Home Buyer Walks Away After Waiving Contingencies, Their Losses Might be More than Meets the Eye

With interest rates rising, the past few months have seen a surge in home buyers backing out of purchase agreements.  CNBC reported that the usual cancellation rate of about 12% had surged to above 20% in several US cities.  Redfin reported that 65,000 buyers backed out in December 2022.  A buyer’s breach can leave sellers in a bind, especially if they purchased a new property.

In instances where a buyer of a California residential property has removed all contingencies, yet still attempts to walk away from the sale, the conventional wisdom is that the consequences are limited.  If a standard California Association of Realtors’ agreement is used, the thinking goes, then the breaching buyer’s liability is limited to 3% of the purchase price – sometimes lower depending on the boxes checked and the amount actually deposited into escrow.

Sellers who watched a buyer walk away might not see a new buyer step in.  They may eventually be forced to sell at a much lower price and hope that they insisted on a sufficient deposit.  But they might be happy to know that contrary to common belief, they can get specific performance, or use that remedy as leverage.

Specific performance is a remedy in what lawyers and judges call equity.  Instead of money damages, equitable relief will result in a court order requiring a party to perform some act.  Specific performance in the present context means requiring the buyer to complete the purchase on the same terms.  Alternatively, the buyer can be required to put the seller in the same position as if the sale had occurred.

Many websites discussing a seller’s remedies when a buyer walks away state that specific performance is not available when damages are a sufficient remedy. But California statutes and law point in a different direction.

A seller suffering breach can elect specific performance as a remedy even if damages are available to seller such as under Civil Code section 3307.  BD Inns v. Pooley (1990) 218 Cal.App.3d 289, 295-296.  A buyer’s willingness to pay liquidated damages do not protect him from specific performance.  Civ. Code § 3389.  The existence of an adequate remedy at law does not preclude a specific performance remedy.  BD Inns, 218 Cal.App.3d at 295-96.  Even for a seller seeking specific performance, a buyer’s breach of an agreement to transfer real property is rebuttably presumed to not be adequately relieved by pecuniary compensation.  Civ. Code § 3387.

This means that after a buyer has waived all contingencies and walked away, a seller who cannot sell the property for near the same price should seriously consider demanding that the buyer perform.  The seller could complete the sale, or obtain a settlement in excess of the liquidated damages or funds deposited in escrow.  Where a greater settlement is obtained, this could make it more feasible for the seller to sell to a new buyer offering a lower price.

Nor should a buyer defend by arguing that interest rates have changed.  The fairness or adequacy of consideration cannot be judged or estimated in relation to events which transpired subsequent to the time of the conveyance; if the consideration was adequate at the time, subsequent events such as a change in property value are immaterial.  Lundgren v. Lundgren (1966) 245 Cal.App.2d 589, Berkeley Lawn Bowling Club v. City of Berkeley (1974) 42 Cal.App.3d 280, 290, Hastings v Matlock (1985) 171 Cal.App.3d 826, 839.  Unless impossibility or impracticability can be established, a mere change in market conditions is likely to be irrelevant.  However, a court or arbitrator may be more likely to order specific performance if the buyer can provably perform, such as an investor who simply doesn’t want a less favorable interest rate.

Taken together, this means that sellers suffering breach may have more options than they think.  They should explore the full extent of their rights when a buyer who waived all contingencies walks away.


Sobodash Law, P.C. Prevails on Summary Judgment in Art Law Matter

The Law Office of Justin Sobodash, P.C. obtained a major victory in an art law case on July 7.  Our office represented famed Italian actress and producer Rita Rusic defending against a lawsuit brought by G&G Productions, LLC, the alleged assignee of her ex-husband, former Italian Senator Vittorio Cecchi Gori.  Rusic filed for divorce from Gori 16 years ago, which was granted on the grounds of physical abuse and infidelity by Mr. Gori.

In several successive, failed Italian lawsuits, Mr. Gori claimed Ms. Rusic converted (i.e. unlawfully took from him) the famed painting, “Wine of Babylon,” by Jean-Michel Basquiat.  Later, in the present lawsuit, G&G sued Ms. Rusic for conversion, claiming that Mr. Gori has assigned his alleged rights in the Painting to G&G, notwithstanding the evidence showing that Mr. Gori gave Ms. Rusic the Painting as an anniversary present.

Our office filed a motion for summary judgment, contending that California’s borrowing statute, and thus the Italian statute of limitations, barred the action.  Judge R. Gary Klausner of the Central District of California agreed, noting that G&G was wrong in claiming that an exception to the California borrowing statute applied.  To the contrary, the court found that the exception (which G&G argued would toll the statutory limitations period) only applied with respect to cases brought against museums, galleries, auctioneers, and dealers.  Therefore, Ms. Rusic’s motion for summary judgment was granted.

G&G was represented by Brent Blakely and Jessica Covington of Blakely Law Group of Manhattan Beach, California.

Justin Sobodash Proud to Serve as Legal Counsel for “Ronny and I”

The firm’s principal recently acted as the attorney for intellectual property and production issues for “Ronny and I,” an ultra-low budget film written and directed by Guy Shalem.  “Ronny and I” tells the story of a young man who comes to terms with his sexuality and his hidden love for his best friend on a weekend getaway trip.  The film recently screened at Cannes Film festival and features actors Adam Berry and Luke Humphrey.  It is an especially novel film in that it was filmed entirely on a smart phone.

Should I Register My Trademark?

“Do I need a trademark for my business?”

Many business owners ask me this question.  The good news for many of them is they already have a trademark.  If your business has sold goods or services using a non-generic word, phrase, or symbol, and there is no similar business that started using the same or a confusingly similar mark before yours, chances are your business already has common law trademark rights in that word, phrase, or symbol.

The real question is: does it make business sense for you to register the mark with the United States Patent and Trademark Office?  As discussed in this post, there are often sound business reasons to obtain a trademark registration.


What if you have a great idea for a trademark, but are concerned that you may not be able to start selling goods or services using the mark in time to get common law trademark rights?  It used to be that if you desperately wanted to have trademark rights in a certain name, you had to rush to market, using the mark to make “bona fide” sales of your goods or services.  If another company beat you to market – even if they made sales a few days before you – they had the trademark rights and you lost the benefit of at least some of your marketing plan.  Now, you can file an “intent to use” (ITU) application which, if approved, essentially gives you trademark rights as of the day of filing, providing you later submit proof that you actually made sales of the goods or services using the mark.  You generally have three years from the filing to provide such proof in the form of a “Statement of Use.”  Once you submit such proof, your trademark rights are enforceable, and “relate back” to the date you filed the ITU application.

If you want to obtain trademark rights in a word, phrase, or symbol before you start doing business, submitting an ITU application is the only way to go.


But if you have common law rights in a trademark, why register it?  There are several advantages to trademark registration.

First, you put the public on notice that you claim the rights to this mark.  In practical terms, this means that if someone else is not aware of your business, and they want to go into business with a mark similar to yours, selling the same or similar goods or services, they will likely be deterred from using your mark after finding it at the Trademark Office website.

Second, should you ever need to sue to prevent another’s use of the mark, having a registration allows you to bring an action in federal court.

Third, if you have a registered mark you are more likely to obtain enhanced penalties against any counterfeiters who may use your mark (including treble [triple] damages and attorney’s fees).  Many in the apparel industry find this especially useful, since counterfeiting is rampant and enhanced penalties mean that counterfeiters risk losing more than all their profits from infringing sales.

Fourth, having a registration on file gives greater credibility to your position that the trademark rights in your company are settled.  This may be very valuable to you several years down the road should you choose to sell your company.  Along similar lines, if you ever have the opportunity to offer your business in the form of a franchise, a registered trademark is invaluable.  That is why many restaurants and other retail establishments are eager to register their marks.


If you choose to register a trademark, the first step you or your attorney will undertake is trademark clearance.  This simply means checking to see if anyone is using the mark to sell similar goods or services.  The similarity of goods or services is important because there may not be a likelihood of confusion if two marks are used to sell different goods or services.  A hypothetical example would be “Wizard” grape soda and “Wizard” camping equipment.  It is unlikely that the average consumer would think that the same company offered both grape soda and camping equipment.  Therefore, if you wanted to sell grape soda using the “Wizard” mark, you probably need not have any concern if your search turned up someone selling “Wizard” software services.

(I should also mention that there are times when another company is using a mark to sell very different goods or services, but you still should not attempt to use a similar mark.  This is true where a mark is “famous” because very high volumes of sales are made using the mark, or because the mark has widespread commercial recognition.  “Coca-Cola” would be an example of a product with very high volumes of sales and “Rolls Royce” would be an example of a product with widespread commercial recognition.  If one were to sell “Coca-Cola” motor oil or “Rolls Royce” candies, the owners of these marks would very likely bring suit for an injunction and damages based on the theory that the new user was “diluting” their famous marks.)

Back to trademark searches:  Although the best practice is to order an expensive trademark search through search services such as Trademarkscan, or have an attorney conduct a preliminary search for you, a business owner can often eliminate marks that are clearly already taken by conducting a preliminary trademark search of their own.   It is much easier to perform your own search for a mark comprised of a word or phrase than a symbol (an example of a trademarked symbol is the famous Nike “Swoosh”).  Although I recommend that you hire an attorney to ensure that your trademark search is comprehensive, you may be able to eliminate some word or phrase trademarks from consideration by performing your own search.

If you would like to conduct your own preliminary search, the first place you should look is the TESS Database on the Trademark Office website (http://tess2.uspto.gov).  If you have a word or phrase you intend to use, you can use the simple search to determine if someone else is already using the mark.  You also have to eliminate “confusingly similar” marks.  (The owners of marks that appear, sound, or have a meaning similar to your potential mark may be able to claim that your proposed mark infringes theirs.)  Taking the “Wizard” grape soda example, you may want to search for “Wizzard” or “Wyzard” as well in order to clear the mark you would like to use.

The second place you should check is Google, Yahoo, and probably a few of the smaller search engines such as Lycos.  I typically begin by just searching for the mark in the search engine.  If there are too many results, you may be able to refine the result by adding an ampersand (&) and another word (or phrase in quotes) following the mark.

The third place to look is Facebook (for both goods and services) and searching “companies” on LinkedIn (particularly for personal or professional services).  You may want to search other social or career networking sites that are targeted toward your goods or services.

The fourth place to look is state trademark registries.  You probably shouldn’t attempt to search all jurisdictions, but it may be worthwhile to Google “Trademark search [insert state here]” and see if anyone has registered your proposed mark in your state, in neighboring states, or in states that are known for the type of industry you are in or contemplating entering.

If you get through these searches and don’t find any identical or confusingly similar marks, you probably have a good candidate for a mark that is not taken yet.  If you want to proceed with registration for the mark, you will probably ask yourself whether to apply for the mark yourself or to hire an attorney.


Now, I don’t want you to think of this post as one long advertisement for my services.  I pride myself on being ethical, and that often means telling potential clients that they shouldn’t pay me or any other attorney to pursue a potential case or other legal matter.  You may want to use a do-it-yourself reference to apply for a trademark yourself.

The problem with do-it-yourself services is that they often don’t emphasize the fact that you are likely to get what is called an “Office Action” from the trademark office in response to your application.  This is essentially a letter from the Trademark Office stating that your application is provisionally denied, and providing factual or legal reasons why the application is denied.  You are given six months from the issuance of the Office Action to respond.  If the Trademark Office accepts your response it may issue the registration, or issue another office action, probably to address minor issues.

There is a good chance you will receive an Office Action.  In my experience as a trademark practitioner, more than two-thirds of applications result in an office action.  Every trademark practitioner I have spoken with shares this view.  Often, the application is initially refused because the mark may be confusingly similar to another mark.  This means that the mark bears too much similarity in appearance, sound, or meaning to a previously existing mark.  In some instances, this might be avoided by changing the proposed mark (if it is an ITU application).  In other instances, this can be avoided if the applicant establishes that it actually had a prior date of first use.

It may also be that the sought-after mark is considered “generic” or “descriptive.”   A “generic” phrase is one which tries to use the name of a product to indicate its origin.  An example would be “apples” as a mark to sell “apples.”  A generic phrase can never have trademark protection.

A “descriptive” mark is one which merely describes an attribute of the good or service.  An example might be “Sweet Juicy Apples” to sell apples.  A descriptive mark can only obtain trademark protection if it has acquired what is called “secondary meaning.”  “Secondary meaning” usually is acquired after a particular seller of goods and services pays for extensive advertising, so that the public knows, in our example that “Sweet Juicy Apples” are from a particular grower, and not merely to describe characteristics of apples.

There are numerous other, more complicated reasons why the Trademark Office might issue an Office Action.  For example, an applicant seeking to brand durable plastic lighters as “TITANIUM” might receive an office action providing that the mark is “deceptive misdescriptive,” because the lighters are not made of titanium metal.

Given the high number of office actions, business owners might want to think twice about filing trademark applications without the assistance of an attorney.  Though the application is simple on its face, there are pitfalls that can be avoided.

For example, an applicant may not think of every qualifying use, and state a date of first use which comes after a competitor’s mark.  Having provided a later date of first use, the applicant may have a hard time making the factual case for priority against another mark.


In summary, trademark registration is a valuable tool for many businesses.  It heightens confidence that a registrant will be able to continue using their business name without competitors attempting to steal goodwill, or falsely claim a superior right to use a mark.  Accordingly, business owners should carefully evaluate the process of filing trademark applications.