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Business Law

Breaches in Real Estate Contracts

Blog 2016 March Breaches in Real Estate Contracts
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Breaches in Real Estate Contracts

Posted By Rifkind Patrick LLC || 23-Mar-2016

When dealing with the sale or purchase of a home, this may be the largest investment of your life, thus it is important that all parties adhere to the contract.

When you enter into a real estate purchase agreement or contract of sale, there will be a number of terms and conditions to comply with.

Both the seller and buyer have several tasks to complete before the deal closes, which usually takes 30 to 45 days to conclude.

If either party fails to complete the terms in the contract, the breaching party is said to have defaulted on the agreement.

When one party defaults on a real estate contract, the non-breaching party may have grounds to file a legal claim against the defaulting party.

Often, there are contingencies in a real estate contract, and when one of the parties fails to fulfill a contingency, for example, the buyer is unable to obtain financing, then the sellers and the buyers are no longer bound by the contract – they are released of their obligations.

It is not uncommon for disputes to arise in real estate contracts. For this reason, the contract must provide instructions that clearly outline how disputes will be resolved.

The contract must explain which dispute resolution process will be used by the parties of the contract, and more often than not, such remedies are designed to avoid court.

Real Estate Purchase Agreements

Real estate purchase agreements contain various terms and conditions, such as:

  • The date that the sale is to close (finalize).
  • The address of the property.
  • A legal description of the property.
  • Which items will be included in the sale (e.g. appliances).
  • The items that will not be included in the sale.
  • A guarantee that the home will come with a clear title.
  • A provision that says the seller will pay for any necessary repairs until the deal closes.
  • The agreed-upon purchase price for the home.
  • The date that the buyers will take possession of the property.

If two parties enter into a real estate contract and one of the parties fails to adhere to their terms of the contract, then he or she is in breach of contract.

For instance, if the seller agrees to repair a termite-ridden porch before the sale closes and they fail to repair the porch, he or she breached the agreement.

If the buyer is still determined to buy the house, they might pursue a modified agreement where they reduce the purchase price, or they may complete the sale and then file a claim against the seller who breached the contract.

If the buyer and seller cannot agree on how to resolve their dispute, they will have to use the dispute resolution process outlined in the contract, which may involve arbitration, mediation or small claims court.

To learn more about breach of contract in residential real estate cases, contact Rifkind Patrick LLC to meet with a Chicago business law attorney.

Categories: Breach of Contract, Real Estate Law, Alternative Dispute Resolution, Construction Disputes

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