What Is Breach of Contract in Real Estate Litigation?
In real estate, contracts are the backbone of most transactions. Whether you are buying, selling, leasing, or developing property, a contract ensures that all parties know their rights, responsibilities, and obligations. However, when one party does not uphold their end of the agreement, it may result in a breach of contract.
Understanding what constitutes a breach of contract and how it impacts real estate litigation is crucial for property owners, buyers, sellers, and anyone involved in property-related transactions.
Understanding Breach of Contract in Real Estate
A breach of contract occurs when one party involved in a legally binding agreement fails to fulfill their obligations as outlined. In real estate, these obligations could involve a variety of actions, such as failing to make payments, not delivering the property in the condition agreed upon, or even backing out of a sale entirely. Real estate contracts are often intricate, outlining specific terms and timelines, which is why even a minor deviation can lead to a breach.
There are two main categories of breach: Material and Minor.
- Material breach: This significantly affects the outcome of the contract and often results in legal disputes. For example, if a seller fails to deliver the property on the agreed date or transfers the property without disclosing existing liens, it could be considered a material breach. Such breaches typically give the non-breaching party the right to terminate the contract and seek legal remedies.
- Minor breach (or partial breach): This occurs when one party does not fulfill a small part of their obligations, but the overall purpose of the contract is still intact. An example would be if a seller delivered the property but did not fix minor repairs specified in the contract. While a minor breach may not allow for termination, the non-breaching party may still seek damages or specific performance to enforce the agreed terms.
Legal Remedies for Breach of Contract in Real Estate Litigation
If a breach of contract occurs, the non-breaching party has several legal options. The remedies typically pursued in real estate litigation include:
- Monetary Damages: This is the most common remedy where the court orders the breaching party to pay compensation to cover the financial loss suffered due to the breach. For example, if a buyer breaches the contract by not making the final payment, the seller may sue for damages equal to the amount owed, plus any additional costs incurred.
- Specific Performance: In some cases, monetary damages may not be sufficient to compensate for the breach. Specific performance is a legal remedy where the court orders the breaching party to fulfill their obligations under the contract. This is common in real estate transactions, as each property is unique, and financial compensation may not be adequate to remedy the breach. For instance, if a seller refuses to transfer ownership despite the buyer fulfilling all their obligations, the court may order the seller to proceed with the sale as initially agreed.
- Rescission and Restitution: If a breach is significant enough, the non-breaching party may seek to rescind the contract entirely. Rescission allows the parties to be returned to their original state before the agreement, effectively canceling the contract. Restitution may also be sought to recover any financial loss or property exchanged under the contract.
It is important to note that the best course of action often depends on the severity of the breach and the desired outcome. Consulting with a legal professional can help determine which remedy suits your situation and provides the most effective resolution.
An Annapolis Real Estate Lawyer at Oliveri & Larsen Can Help End Your Dispute
We understand the complexities of real estate contracts and have the experience to guide you through the litigation process. Speak with an Annapolis real estate lawyer at Oliveri & Larsen today. Contact us online or call 410-295-3000 to schedule your consultation with our experienced team. Located in Annapolis, Maryland, we proudly serve clients in Ocean City, Anne Arundel County, Baltimore County, Baltimore City, Calvert County, Harford County, Howard County, Queen Anne’s County, St. Mary’s County, Worcester County, Kent County, and the upper and lower Eastern Shores of Maryland.