Remedies Available to You in Residential Real Estate Transactions

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Breach of Contract: Remedies Available to You in Residential Real Estate Transactions

Residential real estate transactions involve a significant monetary investment for buyers. For sellers, there are contractual obligations that they must fulfil. However, there are times when a buyer or seller can breach their contractual obligations. As such, it is essential for you to understand the remedies available to you. While your realtor and lawyer will discuss these options with you if the time ever arose, it is also good to know the details yourself so you can make a confident and informed decision.

Remedies available to Buyers:

  1. Return of Deposit

    Buyers typically provide a deposit as a show of good faith when entering into a residential real estate transaction. In the event of a breach by the seller, the buyer may be entitled to the return of the deposit. This remedy allows the buyer to recover the funds initially provided. It also helps mitigate some of the financial loss resulting from the failed transaction.

  2. Specific Performance

    Specific performance is a legal remedy where the buyer can seek a court order to compel the seller to fulfill their obligations under the contract. In residential real estate transactions, this remedy is commonly pursued when the property is unique. It is also an option when monetary damages alone would not adequately compensate the buyer. By seeking specific performance, the buyer can ensure the completion of the transaction as initially agreed upon in the signed contract.

  3. Damages

    Buyers have the right to seek monetary damages as a remedy for the seller’s breach of contract. Damages aim to compensate the buyer for any financial loss suffered due to the breach. The calculation of damages may include various factors, such as the difference between the contract price and the market value of the property, costs incurred due to the breach, and any additional expenses required to secure an alternative property.

  4. Rescission of the Contract

    Rescission is a legal remedy that allows the buyer to cancel the contract due to the seller’s breach. By seeking rescission, the buyer is released from their obligations under the contract. Further, both parties are restored to their pre-contract positions. This remedy may be pursued when the breach is substantial and makes it impractical or undesirable for the buyer to continue with the transaction.

  5. Legal Costs and Attorney’s Fees

    In some cases, buyers may be entitled to recover their reasonable legal costs and attorney’s fees incurred as a result of the breach of contract. This remedy helps alleviate the financial burden on the buyer when pursuing legal action to enforce their rights or seek remedies for the breach.

Remedies available to Sellers:

  1. Retention of Deposit

    When buyers breach the contract, sellers may be entitled to retain the deposit provided by the buyer as a show of good faith. The deposit serves as compensation for the seller’s losses and expenses resulting from the failed transaction. By retaining the deposit, sellers can mitigate their financial damages caused by the buyer’s breach.

  2. Specific Performance

    In residential real estate transactions, sellers can seek specific performance as a remedy when buyers fail to fulfill their obligations. Specific performance allows the seller to compel the buyer to complete the purchase as agreed upon in the contract. This remedy is particularly useful when the property is unique or when monetary damages alone would not adequately compensate the seller.

  3. Relisting and Selling the Property

    If the buyer breaches the contract, sellers have the right to relist and sell the property to another buyer. By doing so, sellers can recover their losses and proceed with the sale. Sellers should ensure they follow proper procedures, such as providing notice to the buyer, documenting the breach, and mitigating damages by actively marketing the property.

  4. Damages

    Sellers have the right to seek monetary damages when buyers breach the contract. Damages aim to compensate sellers for any financial losses suffered as a result of the breach. This may include the difference between the contract price and the market value of the property, costs incurred due to the breach, and any additional expenses required to relist and sell the property.

  5. Legal Costs and Attorney’s Fees

    In certain circumstances, sellers may be able to recover their reasonable legal costs and attorney’s fees incurred as a result of the buyer’s breach of contract. This remedy helps alleviate the financial burden on sellers when pursuing legal action to enforce their rights or seek remedies for the breach.

Lawyers Who Get It!

Whether through retaining the deposit, seeking specific performance, pursuing damages, or recovering legal costs, sellers and buyers have can protect their interests and seek appropriate remedies for the buyer’s breach. It is crucial for sellers to seek legal advice and carefully review the terms of the contract to understand their rights and the available remedies before taking any legal action.