Real estate transactions often involve a significant investment of time and money, and when one party fails to uphold their part in a real estate contract, it can have a significant impact on the other. A breach of contract suit could offer relief from the financial burden of that breach. Generally, there are three remedies for breach of contract: damages, specific performance or the cancellation of the contract.
Damages offer financial compensation.
Because breach of contract in a real estate agreement can have a significant impact on your finances, the court may assign damages. Damages can include:
- Compensatory—These damages address the actual financial impact of the breach
- Punitive—If the breaching party willfully broke their agreement, the court may award additional damages to punish that party.
- Liquidated—Some contracts agree on damages in the contract itself, and this contractual term is often included in contracts for real estate.
These damages can offset the financial impact that the breach has.
Specific performance requires the breaching party to uphold their agreement.
Sometimes, the court cannot award financial damages. When this occurs, the court may order specific performance, in which the party that breached the contract performs the action or actions that they agreed to perform in the contract.
Cancellation of the contract relieves the non-breaching party of their obligations.
If the non-breaching party chooses to do so, the court may cancel the contract. In these cases, the party that breached the contract must pay restitution for any costs that the non-breaching party incurred while upholding their part of the agreement.
While breach of a real estate contract can have a significant impact on the non-breaching party, a breach of contract suit can help offset these difficulties and put them in a better situation.
