Understanding Remedies: What Solution Is NOT a Remedy for Breach of a Real Estate Sale Contract?

When buyers and sellers enter into real estate transactions, they tend to be trusting the process and each other a great deal. But misunderstandings or disagreements can cause a breach of the real estate sale contract, and understanding what remedies are available to the parties in a real estate sale is important — equally as important as knowing what can’t be a remedy.

Introduction to Real Estate Sale Contracts

Definition and Purpose

A real estate sale contract is a legal document that outlines the agreement between a buyer and a seller of real property to transfer the ownership of that property. This contract serves the important function of clarifying the terms of sale, protecting the rights of each party, and outlining a clear road to the transfer of ownership.

With Real Estate Sale Contracts, What Are Some Common Elements

Contracts for these transactions generally cover key aspects like the purchase price, property description, and contingencies (financing or inspections) as well as the closing date. All of these components are necessary when facilitating the process of transferring ownership of the property from one party to another.

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Breach of real estate sales Contract

What Constitutes a Breach?

In the world of real estate, a breach happens when one of the parties doesn’t honor their obligations in the contract. This can involve anything from a buyer refusing to pay the purchase price to a seller providing a defective title.

Legal Implications of Breach

The failure to complete a real estate contract can result in a number of legal effects including lawsuits for damages and, in at least some cases, the obligation to complete the sale through specific performance.

Remedies for Breach of a Real Estate Sale Contract

Types of Remedies Available

6) Compensatory Damages: This remedy comes in the form of money to compensate for damages closely related to the breach.

Specific performance: A legal order requiring completion of the sale according to the terms of the contract.

Retaining the Deposit — If the transaction falls apart, sellers can often retain the buyer’s deposit as liquidated damages if the contract allows it.

Situations where Remedies apply

Whenever you request the restoration of your ability to do something, you are seeking a remedy; and each of these remedies is appropriate under certain circumstances, as will be shown with different real-life situations to help you understand when and how each remedy can be used.

Non-Remedies Solutions

Introduction to Non-Remedies

It is important to distinguish between legal constructs and what does or does not resolve a breach legally.

What are Non-Remedies in Real Estate Contracts

• Alternative Dispute Resolution: The formal term for mediation and arbitration; while these are methods of dispute resolution outside of the courtroom, they are not themselves a legal remedy.
• In general, informal agreements or promises made outside the written contract are not enforceable as remedies in the event of a breach.
• Emotional Damages: Claims for emotional damages are generally non-recoverable in a real estate contract breach.

PEER-LEARNING: Legal Precedents and Case Studies

What follows will be a review of applicable case law demonstrating the kinds of actions that have not qualified as remedies.

Mitigating Damages

Importance of Mitigation

A party that suffers a breach is usually required to take steps to mitigate its damages — that is, to take reasonable steps to reduce its foreseeable losses.

How Sellers and Buyers Can Reduce Damages

The goal is to explore practical strategies for managing loss after a breach of contract for sellers and buyers.

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