Breach of Contract

Once a real estate contract is signed by all parties, it becomes enforceable in a court of law.  Therefore, if someone fails to do what they promised to do in a real estate contract, they risk breaching the contract and could be held to pay monetary damages for any harm the breach caused.  Regularly handles cases involving a breach of contract.  We can advise you on your next steps in the event you suffer a breach of contract by another party.

The Contract

Purchase and sale contracts in real estate are the written agreements used by buyers, sellers, and real estate agents that control the purchase or sale of real estate.  The purchase and sale contract used in California to buy and sell real estate is called the “California Residential Purchase Agreement and Joint Escrow Instructions” or “RPA-CA” for short.  This document outlines your rights and responsibilities when buying or selling residential property in the state of California.

Breach

When one of the parties fails to perform as promised under the RPA-CA, he or she has breached the contract.  Once a breach of contract is established, the party who breached is subject to penalties under the RPA-CA.  For example, if a buyer gives an earnest money deposit but then fails to go through with the purchase, he or she could lose the deposit as a penalty of the breach and may even be subject to further legal action.

Courts will consider several points when determining whether a breach of contract occurred and appropriate remedies for the breach.  One such consideration is whether the non-breaching party can still receive benefit under the RPA-CA despite the breach.  Another consideration is whether monetary damages will compensate the non-breaching party.  Courts will also want to know how much of the contract the breaching party fulfilled prior to the breach and how terminating the contract will affect the non-breaching party.

Remedies

California law outlines what a buyer or seller can recover from a party who breaches the RPA-CA.  If the breach is minor and causes little detriment to the non-breaching party, a court could just require the breaching party to pay for any hardship suffered by the non-breaching party.  But, if the breach is substantial, such as when a seller refuses to convey title or a buyer refuses to pay, then remedies for the breach could be more serious.

 

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