Refusing to Close Real Estate Deal

When parties enter into a sale agreement in a real estate transaction, that agreement is a binding contract. It typically specifies the purchase price, describes information on the closing date, and other relevant facts about the buyer, the seller, and the property. Like other legally binding contracts, if one of the parties refuses to complete the real estate transaction according to its terms, the other party may seek damages for breach of contract.

Seller’s Breach of Contract

If the seller is the party refusing to complete the transaction, the buyer can seek “specific performance”. This is an equitable remedy in which the courts require the seller to actually go through with the sale. It is an available remedy since real estate is considered to be unique and one of a kind, so courts often grant this remedy on the basis that monetary damages are not sufficient to compensate a buyer for suffering the loss of the property.

Specific performance is not the only remedy. The courts may order the seller to pay for any money the buyer lost as a result of the failed transaction, including mortgage application fees or appraisal and inspection costs.  The seller may also need to pay the buyer the cost of the difference between the accepted price on the property and the fair market value. For instance, if the property is worth $100,000 and the agreement was for the buyer to buy the property for $90,000, the seller may be required to pay the buyer this $10,000 difference.

Buyer’s Breach of Contract

If the buyer is the one unwilling to go through the transaction, normally monetary damages is the only remedy granted the seller. Courts are reluctant to require specific performance from the buyer and force this party to buy the property. The buyer will be required to pay for all actual losses, and if the fair market value is worth less than the accepted buyer’s offer, the buyer may have to pay the difference between fair market value and the offered price.

Case Studies: Real Estate Deal Refusals

Case Study 1: John vs. Sarah – Seller’s Breach

John and Sarah entered into a real estate agreement, but Sarah has chosen not to fulfill her obligations under the agreement. As a result, John is seeking either specific performance to compel Sarah to complete the transaction as agreed, or monetary compensation to cover his losses, including fees and the disparity in the price.

Case Study 2: Mark vs. Sarah – Buyer’s Breach

Mark has expressed his unwillingness to proceed with the real estate transaction with Sarah. In this case, Sarah has the option to pursue monetary damages to recover her losses. Additionally, if the fair market value of the property is lower than Mark’s initial offer, he may be required to pay the difference to compensate Sarah adequately.

Case Study 3: Sarah vs. John – Seller’s Breach

Sarah, the seller, has decided not to fulfill her obligations in completing the real estate deal with John. Consequently, John can choose to pursue specific performance to enforce the sale, compelling Sarah to proceed with the transaction as agreed. Alternatively, he can seek compensation for the financial losses he has incurred as a result of the failed transaction.