“If You’ve Gots The Poison, I’ve Gots The Remedy” – Available Remedies for Breaches in Real Estate Contracts

In every FAR/Bar Residential Sale and Purchase Contract, “AS IS” Contract, and Vacant Land Contract, there are terms and conditions that govern the conduct of the parties to the Contract. Unfortunately, there are times when one or both parties to the Contract do not follow those terms and conditions. Often you get this question: “The other side breached the Contract. What can I do?” Also included in most of the FAR/Bar Contracts are available remedies and what steps must be taken to avail yourself of these remedies.  

Typically, the remedies available to a party when the other side breaches the Contract can be found under “Default and Dispute Resolution,” paragraphs 15 – 17 in a FAR/Bar Contract. However, those listed are not usually the exclusive remedies available. The language within those paragraphs leaves it up to the non-breaching party to elect what remedies to pursue. Further, if the parties cannot resolve a dispute under a FAR/Bar Contract informally within ten days, paragraph 16 typically requires the parties to attend a pre-suit mediation with a Florida Supreme Court certified mediator or a mediator with experience within the real estate industry. The attorney’s fees associated with having representation through contractual mediation are the responsibility of each party. The mediation costs are split equally among the parties, detailed in paragraph 17 of the standard FAR/Bar Contract.  

Now you know the steps to take to resolve a contract dispute, but what happens if you cannot amicably resolve such a dispute at or before mediation? What remedies are available to you if the other side breaches the Contract? The following are some typical types of remedies available to you and damages you can recover, depending upon the reason for the breach.  

  1. Liquidated damages: This is the remedy usually specifically listed in paragraph 15(a) of a FAR/Bar Contract. Liquidated damages are a defined amount of money to compensate a non-breaching party for their losses when it may be difficult to quantify the damages. In the context of a real estate contract, it usually allows the Seller to keep the escrow deposit as liquidated damages if a Buyer breaches the contract. If the Seller elects this option, both parties are released under the Contract, and the Seller can re-list the property without the Contract dispute tying up the property. However, should the Seller choose this option, the Seller cannot then pursue any other claim against the Buyer for a breach of the contract.
  2. Compensatory damages: This is simply the ability to recover money from the breaching party for losses you (or your client) sustained as a result of a breach. For a Seller, this could include a loss of property value, carrying costs like having to continue to pay a mortgage, property insurance and taxes, utilities, loss of rental income, etc., and other out-of-pocket expenses. For a Buyer, damages may include the costs of temporary housing, storage, and moving expenses. Mental anguish, inconvenience, and pain and suffering are not usually recoverable for a breach of contract. There are sub-sets to compensatory damages beyond this blog’s scope, such as actual, consequential, anticipatory, and punitive damages.
  3. Specific performance: This is the remedy usually specifically listed in paragraph 15(b) of a FAR/Bar Contract. Buyers more often use this remedy against Sellers who breach. Specific performance is a demand that the Seller performs under the Contract as agreed. In other words, the Buyer sues the Sellers demanding that the Seller sell the property to the Buyer for the amount in the Contract under the terms of the Contract.
  4. Injunctive relief: This is the remedy usually specifically listed in paragraph 16(b) of a FAR/Bar Contract. While it affords a party a quick but temporary way of maintaining the status quo while the dispute is litigated, it is a difficult remedy to establish. A Buyer typically uses injunctive relief as a request to the Court to prevent a Seller from selling property to another party while the parties to the Contract are trying to resolve the breach of contract claims. There are many other uses for a claim of injunctive relief, but for this blog, tying up the property is the main reason it is requested. An alternative to or in addition to a request for injunctive relief, a Buyer could consider filing and recording a “lis pendens” when a suit is filed, which would prevent the property from being sold. Using a lis pendens in a breach of contract claim can be a very complicated matter and not necessarily appropriate in all breach of contract matters.  
  5. Attorney’s Fees: This is the remedy usually specifically listed in paragraph 17 of a FAR/Bar Contract. As stated above, prior to filing suit, each party is responsible for their respective attorney’s fees. Once a lawsuit is filed, a prevailing party can be awarded their attorney’s fees and costs associated with the litigation to be paid by the non-prevailing party. It sounds pretty straightforward, but it is often unclear who is considered a “prevailing party” when both sides claim the other side breached. In addition, both parties usually agree to be responsible for their own attorney’s fees and costs if the matter settles after the suit is filed. The takeaway is that you should not assume that if you sue a purported breaching party, you will always get your attorney’s fees and costs back from them.    

This is not an exhaustive list of remedies available to a party when the other party has breached a real estate contract, so make sure you consult with a qualified real estate litigation attorney before pursuing any breach of contract claim.   

Mark C. Mann, Esq. mcmann@berlinpatten.com
Mark focuses his practice on representing individuals in civil litigation including personal injury and wrongful deaths, real estate disputes, contract disputes, contested probate matters, and family law cases.  

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