In real estate transactions, contract breaches may result in complex scenarios with potential consequences for both buyer and seller. Unless otherwise limited by legal documents including the contract, addenda to the contract, title, or recorded documents such as the Declaration of Covenants, the following are remedies if one party breaches. Contracts serve as the foundation of real estate transactions, ensuring that both parties’ interests are protected. However, breaches can and do occur. In such situations, being well-informed and seeking appropriate legal guidance can provide the best possible outcomes.
There are remedies available to both buyers and sellers due to each other’s default. These remedies include:
Specific Performance: This remedy requests that the Court force the opposing party to perform the contractual obligations set forth in the contract. If a seller breaches, for instance, the buyer can pursue specific performance, with the hope that the Court compels the seller to proceed with the sale at the initially agreed-upon price, regardless of market fluctuations since both parties went to contract. Similarly, a buyer may bring a specific performance suit against the seller if the seller has a change of mind and does not proceed with the contract. While specific performance is a remedy, the cost of bringing such a lawsuit may be prohibitive.
Money Damages: Buyers may seek the return of their deposit along with reimbursement for expenses incurred due to the seller’s breach. These costs can include legal fees, appraisal charges, survey costs, and inspection fees. Should the buyer default, a seller may be able to obtain monetary relief calculated as the difference between the contract price and the market value (minus any deposits the buyer may have provided in escrow).
Typically, a real estate attorney is able to navigate and resolve the termination of a residential real estate contract by working on a settlement that is fair and acceptable to both parties.