A real estate sales contract typically involves two parties – the seller and the buyer – both of whom are required to do their part and abide by the terms of the contract they enter into. When one of the parties fails to do so, it amounts to what is called a breach of contract and the other party has the right to sue them for damages.
What Constitutes a Breach of Real Estate Sales Contract in Alabama?
If one of the parties involved in a real estate sales contract fails to fulfill their obligations and if the other party suffers losses as a result, it can be considered a breach of contract.
For instance, the buyer might fail to obtain financing or fail to close escrow within the time frame specified in the contract. Similarly, the seller might fail to provide a clear title to the property they intend to sell. Or they might back out at the last moment and refuse to go through with the sale.
It should be noted that a breach of contract can only occur if the contract in question is legally valid. In order to be legally valid, it must be in writing and must contain an offer and an acceptance, a consideration, and mutual assent by the parties involved.
Moreover, in order to establish that a breach of contract occurred, you need to prove the following elements.
- You and the other party entered into a real estate sales contract and agreed to abide by its terms.
- You fulfilled your obligations as specified in the contract while the other party did not.
- The other party’s violation of obligations amounts to a material or substantial breach of contract.
- You suffered quantifiable financial losses as a result of the aforementioned breach of contract.
What You Should Know about Contingencies in a Real Estate Sales Contract
Real estate sales contracts typically include contingencies that are to be met by both parties in order for the sale to proceed as planned.
For instance, the buyer might add a contingency that they will buy the property only if they manage to obtain the financing they need and if they are satisfied with the results of a home inspection. Similarly, the seller might add a contingency that they will go through with the sale only if they are able to buy a new house within a specific time frame.
If one of the parties fails to uphold their end of the bargain as a result of a contingency not being met, it might not be considered a breach of contract. For instance, if the buyer is unable to obtain the financing they need, they might not be able to buy the property. In such a scenario, the seller cannot accuse the buyer of breaching the contract.
Similarly, if the seller is unable to buy a new house despite trying their best, they might have no choice but to cancel the contract. If and when they do, the buyer cannot accuse them of breaching the contract.
On the other hand, if one of the parties breaches the terms of the contract without any valid reason, the other party can file a lawsuit and demand monetary compensation for the losses they suffered.
What Are the Damages You Can Seek for Breach of a Real Estate Sales Contract in Alabama?
If the seller breaches the contract, the buyer can seek compensatory damages, which might include:
- The earnest deposit they made
- The cost of a survey and title examination
- The cost of home inspection
- Attorney’s fees
- Other losses, if any
If the buyer breaches the contract, the seller might be able to retain the earnest deposit made by the buyer in most cases. They can also demand the buyer to compensate them for the financial losses they suffered if any.
Apart from this, in some cases, the party that suffered losses due to the breach of contract might be able to file a lawsuit for specific performance and make the other party comply with specific terms of the contract.
For example, if the seller backs out of the contract at the last minute for no reason, the court might order them to proceed with the sale and transfer ownership to the buyer.
Seeking Remedies for Breach of Real Estate Contract in Alabama? Let Us Help You!
If you have suffered losses as a result of a breach of a real estate sales contract, you might be entitled to compensation as well as specific performance remedies. The real estate attorneys at Davis, Bingham, Hudson & Buckner P.C. have decades of experience in resolving real estate contract disputes and can provide you with the advice and guidance you need to get the compensation you deserve.
For over 40 years, we have been providing the highest level of real estate-related legal services to the residents of Auburn and other surrounding areas. We can fight for you and make sure you get the compensation and other remedies you deserve.
To talk to one of our accomplished Alabama real estate lawyers, call us today at 334-821-1908 or contact us online and schedule a free consultation.