State of Faith: Making Sense of California Real Estate Good Faith Negotiation Agreements

Delmar G. Williams

Delmar Williams is a real estate transactional attorney in San Diego. His practice encompasses all aspects of real estate use, development, and financing. He has negotiated real estate transactions throughout California. Delmar can be reached by e-mail at delmar.williams@williamslaw.us.

I. Introduction

Real estate purchasing and leasing transactions often require the purchaser or tenant to expend significant amounts of time and money determining the feasibility of the transaction before entering into a binding contract for the purchase or lease of the subject real estate. A landowner failing to act in good faith when negotiating the prospective purchase contract or lease agreement can impose considerable costs on a prospective purchaser or tenant due to the time and financial investment made by the purchaser or tenant in due diligence activities and contract negotiation. To protect their investments, prospective purchasers or tenants often request that landowners forego other economic opportunities for the property during the due diligence and contract negotiation time periods. Alternatively, a prospective purchaser or tenant failing to act in good faith while negotiating a purchase contract or lease agreement can cost a landowner significant contract negotiation expenses and lost opportunities for the sale or lease of the property to someone else during the contract negotiation process.