Parties usually enter into a real estate contract with the intention of either selling a piece of property or buying one. The goal is that both sides will get what they want. Unfortunately, however, sometimes one party may not perform as agreed upon and their behavior may constitute a breach of contract.
Fortunately, there are remedies available under Arizona law for the non-breaching party when a real estate dispute arises due to a breach of contract. Legal remedies will compensate the injured party monetarily. An equitable remedy, on the other hand, will provide other relief.
Specific performance is one type of equitable remedy. One unique quality of real estate transactions is that each property is distinct and cannot be replicated. Under specific performance, a court will order that the parties complete the terms of the contract. Courts typically impose this remedy against sellers, requiring the breaching seller to deliver a deed to the buyer. A buyer cannot be made whole by monetary compensation in this situation – the buyer wants a specific piece of property – and therefore, a court may order the seller to sell the property as initially agreed upon.
Damages are a legal remedy. An injured party may receive damages that equal the difference between the purchase price, as agreed upon by the parties, and the value of the property. A seller dealing with a buyer who has breached may argue that the value of the property was less than the purchase price in order to obtain the maximum possible damages award.
Parties entering into a real estate contract may wish to include contractual provisions that protect them in the event that a party breaches. For example, a provision requiring the award of attorneys’ fees in the event of a breach may prove financially advantageous.
Most real estate contracts proceed without a breach of contract, but sale disputes do happen. In the event a buyer or seller finds himself facing the possibility of real estate litigation, seeking out experienced legal counsel may prove valuable.
Source: The National Law Review, “The Consequences of Walking Away: Breach of Contract in Commercial Real Estate,” Joshua J. Markham, accessed June 5, 2015