Steiner Case Accepted For Review By California Supreme Court
We recently sent a Client Alert concerning a ruling by the California Court of Appeal for the Third Appellate District in the case of Steiner v. Thexton. The Steiner case held that a real estate purchase and sale agreement was really a disguised option agreement which was unenforceable by the buyer due to lack of consideration. In our prior Client Alert, we noted that the ruling called into question the enforceability of a real property purchase contact that included a typical “free look” period in favor of the buyer to perform its due diligence investigations.
The Steiner case has recently been accepted for review by the California Supreme Court. This means that the Court of Appeal decision may not be cited or relied upon by any court or party in another legal action.
We will continue to keep you informed of developments concerning this case. Even though the Court of Appeal decision may no longer be cited, its holding or its reasoning may still be adopted by the Supreme Court. As a result, it may still be prudent to follow our earlier recommendation that a buyer entering into an agreement to purchase real property structure the agreement either as an option agreement with an up-front, non-refundable option payment to the seller, or as a traditional purchase agreement with the payment of a meaningful non-refundable amount to the seller in consideration for entering into the purchase agreement.
