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Pop star’s dispute highlights difficult issues in real estate law

On Behalf of | Dec 19, 2023 | Real Estate Law

Ordinarily, it’s very difficult for a seller to get away with backing out of a real estate sale. But the sale of a $15 million estate is no ordinary real estate deal, and pop star Katy Perry is no ordinary buyer.

The Wall Street Journal recently detailed the ongoing litigation involving Perry’s efforts to purchase a valuable property near Santa Barbara. In 2020, an 84-year-old businessman signed a contract saying that he would sell the luxurious estate to Perry, but tried to back out of the deal just a few days later.

This prompted dueling lawsuits from both sides. Perry’s legal team has sued to enforce the contract and demands more than $3 million in damages. In its defense, the businessman’s team claims that he lacked the mental capacity to enter into a valid contract due to an illness and some medication he was taking after a recent back surgery.

Last month, a judge dismissed that argument, finding evidence the seller did have the capacity. The case is scheduled to resume in February, at which time the court will decide on the issue of damages.

Backing out of a real estate sale

Although there are many unusual features to the Perry litigation, at its heart it involves a fairly common type of dispute. Sellers try to back out of transactions for a variety of reasons, including unexpected financial difficulties, inability to find a suitable replacement for the property, or simply getting a better offer.

Generally speaking, it’s much harder for a seller than a buyer to back out of a deal.

If the buyer fails to perform their end of the bargain, a seller may be able to back out of a sale. Otherwise, if the contract is valid, the buyer can sue to enforce the contract.