Buying or selling a home isn’t just a financial transaction—it’s a major life event. You plan, you prepare, and you envision the finish line: keys in hand, deal sealed, everyone walks away happy. But what happens when the other party breaches the contract and turns your smooth-sailing deal into a legal mess?
Whether you are the non-breaching party or trying to understand your next move, here’s what you need to know.
What Exactly Is a Breach of Contract in Real Estate?
Not all contract breaches are created equal. Some throw everything into chaos, while others are inconvenient but fixable. Here’s how they break down:
- Material Breach – This is the serious one. It disrupts the contract in a way that makes fulfilling it nearly impossible—like a seller refusing to hand over the property even though the buyer has done everything required.
- Minor Breach – A nuisance, but not necessarily a deal-breaker. Maybe the buyer was supposed to provide documentation by a certain date and missed it. Annoying? Yes. Fatal to the deal? Not necessarily.
- Anticipatory Breach – When one party signals before the deadline that they won’t be able to meet their obligations. Think of a buyer admitting a week before closing that their financing fell through.
No matter how the breach occurs, you have legal options to protect yourself and your investment.
What Can You Do If the Other Party Breaches the Contract?
So, what now? When the other party doesn’t hold up their end of the deal, here’s what you can do to take control of the situation.
1. Specific Performance: Forcing the Deal to Go Through
Sometimes, money isn’t enough to make things right—especially when it comes to real estate, where every property is unique. If you’ve set your heart on a particular home or investment and the breaching party tries to back out, you may be able to legally force them to honor the contract. This is called specific performance—a court order that requires the seller or buyer to follow through.
This remedy is often used when replacing the property isn’t an option. If a seller refuses to turn over the property after the buyer has fulfilled their obligations, a judge may step in and make it happen.
2. Monetary Damages: Getting Paid for Your Losses
If specific performance isn’t practical (or you don’t want to force the sale), you may be entitled to monetary damages to cover your financial losses. Here’s what that could look like:
- Compensatory Damages – Covers direct losses, like extra costs you incur while securing a new property or finding another buyer.
- Consequential Damages – Compensates for indirect losses, like lost business opportunities caused by the breach of contract.
- Liquidated Damages – If your real estate contract includes a pre-set penalty for breach, you may be entitled to that amount.
For example, if a buyer suddenly disappears without cause, the seller might be able to keep the earnest money deposit as compensation.
3. Rescission: Walking Away and Starting Fresh
Sometimes, the best option is to scrap the contract and start fresh. This is called rescission, and it allows both parties to walk away as if the contract never happened.
For example, if a seller misrepresented the condition of the property, the buyer could rescind the contract and demand a refund of any money paid.
4. Attorney Fees: Making the Other Party Pay for Your Legal Costs
Real estate disputes aren’t cheap, but if your real estate contract includes an attorney fees clause, the breaching party may be required to cover your legal costs. If you take them to court and win, they could end up footing the bill.
What Should You Do Next? Steps to Take Now
If you’re staring at a breach of contract case, don’t panic. Here’s what you should do next:
1. Review Your Contract Carefully
Start by reviewing your contract from top to bottom. Look for:
- Remedies for breach of contract that may already be built into the agreement.
- Liquidated damages clauses that set financial penalties for backing out.
- Deadlines and contingencies that the breaching party may have failed to meet.
2. Try to Work It Out First
Not every contract dispute needs to turn into a legal battle. Sometimes, a simple conversation can resolve things. Reach out to the other party and see if there’s room to negotiate before heading to court.
3. Consult an Experienced Real Estate Attorney
If a friendly conversation doesn’t do the trick, it’s time to bring in a real estate attorney. An experienced attorney can help you explore your legal options—whether that’s demanding specific performance, seeking monetary damages, or canceling the contract altogether.
4. File a Lawsuit If Necessary
If the breaching party refuses to cooperate, your last resort is taking legal action. A breach of contract lawsuit can enforce the original agreement or compensate you for financial losses. Keep in mind that the court may take time to process these cases, so acting promptly is crucial.
How to Protect Yourself from Future Breaches
No one wants to deal with a breach of contract, so taking steps to prevent one in the first place is always a smart move. Here’s how to protect yourself in future real estate transactions:
- Have a real estate attorney review your contract – A legal professional can help spot potential problems before you sign.
- Make sure all obligations and deadlines are clear – Misunderstandings often lead to disputes.
- Include penalty clauses – Liquidated damages clauses can act as a deterrent against breaches.
- Document everything – Keep records of emails, agreements, and payments to back up your claims if needed.
Resolve Your Real Estate Contract Breach with Professional Support
A breach of contract in real estate law can feel like a nightmare—but you don’t have to go through it alone. Whether you need to enforce the contract, seek monetary damages, or simply move on, there are legal solutions to help you recover from a deal gone wrong.
If you’re the non-breaching party, now is the time to take action. Contact me today to explore your options and get seasoned legal guidance. Cavell Law Firm is here to help you navigate this situation and protect your interests every step of the way.
