Real Estate Transaction Disputes
Our law office handles disputes in connection with purchase/sale agreements, escrows, fraud and real estate broker liability (including constructive fraud).
Real estate sales transactions can result in numerous problems for both seller and buyer. A seller can fail to perform under the contract and so can the buyer. But, unless such performance pertains to a condition (e.g. failure to purchase because buyer couldn't obtain financing which was a condition of purchase), the party failing to perform may be in breach of contract and liable for damages to the other party.
If the buyer breaches the contract and a liquidated damage provision is initialed by the parties and meets certain statutory guidelines, the deposit becomes the sole damages. If the seller breaches, or the buyer breaches and there is no effective liquidated damage clause, damages consist of the benefit of the bargain (i.e. difference between the contract price and market price of property) and other items. A breach however is not caused just by a party failing to perform; the other party has to make certain that he has done everything or substantially everything required on his part to be performed, or as to the payment of the price (by buyer) or deposit of deed (by seller), offered to perform on condition that the other party perform. An exception would be when prior to complete performance by one party that party orally or in writing announces that he will not perform. Then the other party the has an immediate claim for breach of contract against the party making such statement without the claimant party having to first complete his performance or making an offer to perform.
Fraud by the seller in a real estate sales contract can allow the buyer damages or alternatively the right to rescind. Fraud by the seller must consist of an express misrepresentation, or an active concealment of or failure to disclose a material defect. In the first case the fraud must result from intentional or negligent conduct and in the last two instances must arise from intentional conduct. In the case of an express intentional misrepresentation the seller must know of its falsity or have no knowledge of whether the representation is true or false. In the case of a negligent express misrepresentation the seller would believe that the representation conveys the truth but the belief is not well founded. Active concealment and failure to disclose must be deliberate, that is the seller had knowledge of the defect. As to non-disclosure the defect must be latent, which is not obvious to the buyer. Examples of fraud ---exaggeration of income of income producing property, failure to disclose leakage problem and painting over area in ceiling where water drips from leak.
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