One thing you don’t want to have to deal with in a real estate transaction is a breach of your contract. In any real estate transaction, the contract binds both parties to a series of terms and conditions. If those are not followed, then the contract is breached and may no longer be valid.
There are several common issues that lead to breached contracts. Some of the most typical include:
- Missing a date when a payment was meant to be paid to a contractor
- Failing to deliver the deed at a predetermined date
- Failing to finish the property by the end of the contracted period
If you run into issues with a real estate contract, whether you’re a buyer or seller, you need to take action.
When one party breaches a real estate contract
If only one party breaches the contract, it is up to the other party to determine if they would like to take action against them. For example, if a contractor is building your home and they don’t finish it on time or within the guidelines you discussed, you may decide to seek compensation from them or to cancel out the contract completely. Exactly what you can do will depend on the contract you have with the contractor and the terms within.
If the seller is the non-breaching party, they can generally keep the good faith deposit on contracted work or the property itself. They may also decide to sue the buyer for damages or to make them comply with the contract.
How can you avoid issues with your real estate contract?
The first thing to do is to go over the contract before you ever sign it. It’s valuable to have a deep understanding of the contract and to know what each party is obligated to do. You’ll also want to know what happens if you or the other party cannot fulfill the contract.
Only enter into contracts you’re comfortable fulfilling. If the other party violates the contract, then you may be able to take them to court, go through arbitration or take other steps to hold them liable for any damages suffered.