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
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.