What Is A Real Estate Breach Of Contract?
A real estate breach of contract occurs when the buyer or seller misses a deadline. It could be a deadline for a closing date. It could be that in the contract it said the seller shall paint the entire home pink before the closing and they didn’t. If we get to the closing date and the home is still yellow, there is a breach.
What Happens To The Deposit Money When The Buyer Backs Out?
New York typically has contingencies so that if a buyer is going for a mortgage and they don’t get it approved by a bank within 30 days, they get their deposit back. In the event that the home doesn’t appraise for the value, the contract says, the seller would have to refund the down payment. Even when the seller should get to keep the buyer’s down payment, as a practical matter in New York, once the seller sends a notice of cancellation, the buyer’s attorney is going to object and come up with an excuse, if the seller files a lawsuit to keep the down payment and terminate the contract. Usually, the seller agrees to give the buyer back a portion of the down payment just to quickly settle the matter and move on.
What Are Real Estate Breach Of Contract Remedies?
Once a seller signs the contract, they are obligated to go forward in the typical sales contract that gives the buyer what is called a right of specific performance. This means that in the event that the seller breaches, the buyer can go to court and have a judge appoint a referee. If the seller absolutely refuses, then the referee can sign over the deed to the home to the purchaser, in exchange for the purchase price. The seller has very few, if any, remedies where specific performance is an option. When a buyer breaches the contract, typically damages are limited to their down payment.
Should I Sue A Buyer For Breach Of Contract?
In 22 years and 2500 closings, I’ve never actually sued or been sued for breach of contract. It’s too expensive and too lengthy in New York. The parties should agree to some sort of amicable parting, which usually means giving the buyer back a portion of their down payment.
How Much Can You Sue For A Breach Of Contract?
If you are the buyer and the seller breached, you can sue for the value of the property or for specific performance. For a seller to sue a buyer on a breach of contract, unless the contract says otherwise, they are typically limited to the down payment. That’s usually the most money the buyer can lose.
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