A contract holder suspects the seller may sell to another buyer. What action should they take to preserve their rights?

To preserve their rights in a situation where a contract holder suspects that the seller may sell to another buyer, filing a lis pendens is the appropriate action. A lis pendens is a legal notice indicating that there is a pending legal claim on the property in question. By filing this notice, the contract holder effectively alerts any potential buyers or interested parties that the property is under dispute, which can prevent the seller from transferring the property to another buyer without addressing the existing claim.

This action serves to protect the contract holder's interest by publicly asserting their claim and making it more complicated for the seller to act unilaterally. It's a strategic legal tool that communicates to the world that there is an unresolved matter pertaining to the property.

Other actions, such as beginning a suit for specific performance, may come after there is clear evidence of a breach by the seller but do not provide immediate protection against the seller selling to another buyer. Posting a warning sign would not have any legal standing and does not provide the necessary formal notice to other parties, while declaring the deposit forfeited would likely jeopardize the contract holder's position and rights, rather than protect them.