Breach Of A Real Estate Contract In Florida
Many people have heard horror stories about real estate deals that have gone bad. Very often, they involve a seller, who, at the last possible moment decides that they no longer want to sell the property in question while sitting at the closing table. What most people are not familiar with, however, are the various options available to the jilted party.
Good Faith Contract
When you find a property you want to buy, you negotiate terms with the seller. Once the specifics are agreed upon, the property is often referred to as being “under contract.” This is because the real estate agents involved draft a contract, in which the parties agree to the specifics of the deal. These contracts are often “standard” contracts drafted by real estate organizations. The contract typically contains provisions dealing with aspects of the sale including, but not limited to:
- The legal description of the property;
- The selling price;
- The requirement for and details of a planned home inspection (if it has been negotiated for and the transaction is not an “as is” sale);
- The responsibility for closing costs;
- An agreed upon closing date (not always a date-specific but often a date is specified);
- Delineation of the right of rescission and in what circumstances the contract can be rescinded;
- Damage provisions for breach of contract;
- Alternative dispute resolution process; and
- Various contingencies.
As with most contracts, most anything can be included as a term that is bargained for in good faith by the parties.
The Matter of Contingencies
Most real estate contracts contain contingencies on the part of both the seller and buyer. Examples of contingencies commonly found in real estate sale contracts include the buyer finding financing, the seller finding a suitable residence during the pendency of the sale and obtaining a favorable home inspection. If these contingencies are not satisfied, the parties can walk away from the contract, usually with no repercussions, provided they made good faith efforts to achieve the required contingency. Failure to meet contingencies are not considered breach of contract.
What Happens If One Party Breaches The Contract?
There are any number of reasons and circumstances that can cause a buyer or seller to breach the contract. For this discussion, assume that the seller has received a better offer for the property in question just before the parties sat down at the closing table with their agents and attorneys. In this case, since there is an obvious dispute, the parties would resort to whatever alternative dispute resolution they set out in the contract. These options would potentially include arbitration, mediation or small claims court litigation. Small claims court is most likely excluded in this example as the dollar value in dispute is surely outside of the limit of the court’s jurisdiction.
If the contract specifies binding arbitration, the parties present their sides before an arbitrator instead of a court. The parties must abide by the decision of the arbitrator and usually do not have recourse to the courts, except in exceptional circumstances.
If the contract specifies non-binding arbitration and the parties are not happy with the decision, then the most likely outcome is litigation through the courts. There are many remedies available through the court.
Our Attorneys Can Help
The complexity of real estate contracts is limited only by the imagination of the people who draft them. However, the protection that can be afforded to both parties by the terms of the contract is a very important part of the real estate transaction. You should not trust the drafting of such an important document to just anyone. If you find yourself in need of a real estate contract or you find yourself on either side of a breached contract, you can trust the skilled professionals at the Coral Gables law firm of P.A. Bravo to handle your needs. Please give us a call at (305) 209-9019 to set up a consultation to ensure that your interests are preserved through every step of the process.