In Florida, real estate transactions are governed by detailed contracts that outline the responsibilities and obligations of the buyer and the seller.
Even so, real estate contract and purchase agreement breaches are not uncommon. Knowing about them can help you identify contract violations and resolve them promptly.
1. Failure to disclose property defects
One of the most common breaches occurs when sellers fail to disclose known defects in the property. Florida law requires the disclosure of any known material defects that could significantly affect the property’s value or desirability. For example, if the seller knows of any defect in the property that the buyer would not be able to uncover through regular or reasonable due diligence (i.e. inspection, examining records, etc.), then the seller would likely be under an obligation to disclose this. Common material defects that we see often involve known structural issues, plumbing and electrical problems, environmental hazards (mold, lead paint, etc.)., terminate damage, and especially in Florida, water damage.
Failure to do so can lead to legal action and potential financial compensation for the buyer., which can be very costly for the seller. This is why it is important to be fully transparent on the disclosure form and throughout the closing process, so that litigation after the fact isn’t a viable worry.
2. Non-payment or late payment
Another frequent breach involves the buyer’s failure to make timely payments as stipulated in the contract. This can include the initial deposit, subsequent payments or the final closing amount. This seems pretty straight forward, but this happens very frequently. Failure to pay the earnest money deposit, failure to adhere to some agreed upon pre-closing payment schedule, or failure to come to closing with the funds necessary to finish can result in costly litigation between the parties. What makes this more detrimental is that most real estate contracts include a provision allowing the prevailing party in litigation to recover their attorney’s fees and costs, which can increase the judgment amount significantly.
Non-payment or late payment can result in the seller seeking damages or even terminating the contract. The best way to avoid this, especially as a buyer, is to not over-leverage your position and to shop for what you can afford and for what is in your means. The extra square footage is not worth the hassle or threat of litigation.
3. Failure to perform agreed-upon repairs
Sellers are often required to complete certain repairs before the sale is finalized. Failing to perform these agreed-upon repairs constitutes a breach of contract. It can lead to delays in closing and additional buyer costs. If there are repairs needed that the seller has agreed to make, there should be a provision in the contract that allows for the automatic extension of closing should a delay in completing the repairs occur (i.e. supply chain or material availability issues). Additionally, the contract should require the seller use reasonable efforts to complete the repairs in a timely manner. That way, the buyer is protected if the seller is dragging his feet or not timely repairing what was agreed to.
Impacted buyers can pursue potential legal action to enforce the contract terms.
4. Failure to secure financing
When buyers fail to secure the necessary financing within the specified timeframe, it may be a breach of contract. Since this disrupts the entire transaction, it can create financial and logistical issues for all parties involved.
Sellers may be able to pursue a breach of contract claim if the buyer fails to secure financing on time, depending on the language of the contract. Additionally, the seller may be entitled to the earnest money deposit that was submitted, so now the buyer would lose both the property and the deposit submitted. The best way to avoid this mimics our guidance above- that is, shop within your means. Come to the offer table with a plan and a budget.
Awareness of the pitfalls and guidance from an experienced representative can help harmed buyers and sellers find a solution for contract breaches. At Corey Szalai Law, PLLC we deal with purchase and sale contract issues on a daily basis and would look forward to discussing your issue with you to see if you have a claim worth pursuing or a defense worth mounting. Call today to set up a consultation.