Buying or selling real estate can be one of the most significant financial transactions you’ll ever make. With high stakes involved, it’s important to understand your rights should your contract be breached. In California, specific laws protect both buyers and sellers when things go wrong in a real estate deal. Knowing what to expect and how to react can make all the difference if you find yourself in this situation.
What Constitutes a Breach of a Real Estate Contract?
A breach occurs when one party fails to fulfill its obligations as outlined in the contract. In real estate transactions, breaches can happen in various ways:
- The buyer fails to secure financing or back out of the deal without legal grounds.
- The seller refuses to transfer the property after agreeing to the terms.
- Either party does not meet key deadlines, such as closing dates or inspection periods.
Contracts often have contingencies that allow for certain exceptions. For example, if a buyer cannot obtain financing despite making reasonable efforts, they may not be in breach. Understanding these provisions is essential for determining whether a breach has occurred.
Common Types of Real Estate Contract Breaches
Here are some common types of breaches that can occur in real estate contracts:
Failure to Pay
One of the most straightforward breaches is the failure to make the agreed-upon payment. For buyers, this often means failing to secure a mortgage or other financing. For sellers, a failure to transfer ownership after receiving payment could also be a breach.
Missed Deadlines
Real estate contracts often come with specific deadlines, such as closing dates, inspection periods, or financing deadlines. If either party misses these deadlines without a valid reason, it may constitute a breach.
Failure to Disclose
In California, sellers are legally required to disclose known defects or issues with the property. Failing to provide accurate and complete information can result in a breach of contract. Buyers who discover undisclosed problems may have grounds to back out of the deal or seek compensation.
What Are Your Legal Remedies?
When a breach occurs, the injured party may be entitled to several legal remedies. The type of remedy will depend on the nature of the breach and the terms outlined in the contract.
Specific Performance
In some cases, the court may order the breaching party to fulfill their end of the bargain. This is called “specific performance.” This remedy is particularly common when a seller breaches the contract, and the buyer still wants to go through with the purchase.
Monetary Damages
If the breach causes financial harm, the injured party may be entitled to monetary compensation. This could include expenses like inspection fees, appraisal costs, and even attorney fees. In some cases, the court may also award consequential damages if the breach resulted in significant financial losses.
Rescission of the Contract
In cases where it is no longer reasonable to expect the deal to move forward, the court may order a rescission of the contract. This essentially cancels the contract, and both parties are released from their obligations. The goal of rescission is to return the parties to their pre-contract positions.
How to Protect Yourself in a Real Estate Transaction
To minimize the risk of a breach, it’s essential to take precautions when entering a real estate contract. Here are a few tips:
- Work with a Real Estate Attorney: An experienced attorney can help ensure that the contract is fair and legally sound, reducing the likelihood of disputes.
- Understand Contingencies: Make sure the contract includes appropriate contingencies for financing, inspections, and other key aspects of the transaction. This provides an “out” if certain conditions are not met.
- Meet Deadlines: Staying on top of deadlines for financing, inspections, and closing can help you avoid unintentional breaches.
- Thorough Disclosures: If you’re a seller, ensure that you disclose all known issues with the property to avoid future disputes.
Contact a San Jose Real Estate Attorney
Real estate transactions are complex, and breaches of contract can occur for a variety of reasons. Whether you’re the buyer or the seller, understanding your rights and legal remedies is crucial if things go wrong. If you find yourself dealing with a breach, working with a knowledgeable California real estate attorney can help you protect your interests and navigate the legal process.
If you’re facing a breach of contract or have questions about your rights in a real estate deal, you deserve professional legal assistance. Your rights and well-being deserve dedicated advocacy. Reach out to the experienced real estate law team at BoyesLegal, APC. We are committed to helping you navigate the process. Contact us today.