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Real Property • Conveyances
PROP#165
Legal Definition
Remedies for breach include damages (difference between contract price and market value at breach), specific performance (with abatement), or liquidated damages (earnest money).
Plain English Explanation
If one party breaches a land sale contract, there are several remedies available to the non-breaching party. Here's a breakdown of the main options:
(1) Damages: This is the most straightforward remedy. The non-breaching party can get compensated for the financial loss caused by the breach. Specifically, they can recover the difference between the contract price and the market value of the property at the time of the breach. So, if the market value of the property dropped after the breach, the non-breaching party could claim the difference to cover the loss.
(2) Specific performance: This is a unique remedy where the court orders the breaching party to actually go through with the contract. This is often used in land sale contracts because every piece of land is considered unique, and money damages might not be enough to make things right. If there are issues with the property (like minor defects), the court might allow abatement, meaning the price can be adjusted to reflect those defects while still enforcing the contract.
(3) Liquidated damages: Sometimes, the parties agree ahead of time on a set amount that will be paid if someone breaches the contract. This is often the buyer’s earnest money deposit—the sum they put down to show they’re serious about the purchase. If the buyer breaches, the seller might get to keep this deposit as compensation. But liquidated damages must be reasonable, not a huge penalty.
(1) Damages: This is the most straightforward remedy. The non-breaching party can get compensated for the financial loss caused by the breach. Specifically, they can recover the difference between the contract price and the market value of the property at the time of the breach. So, if the market value of the property dropped after the breach, the non-breaching party could claim the difference to cover the loss.
(2) Specific performance: This is a unique remedy where the court orders the breaching party to actually go through with the contract. This is often used in land sale contracts because every piece of land is considered unique, and money damages might not be enough to make things right. If there are issues with the property (like minor defects), the court might allow abatement, meaning the price can be adjusted to reflect those defects while still enforcing the contract.
(3) Liquidated damages: Sometimes, the parties agree ahead of time on a set amount that will be paid if someone breaches the contract. This is often the buyer’s earnest money deposit—the sum they put down to show they’re serious about the purchase. If the buyer breaches, the seller might get to keep this deposit as compensation. But liquidated damages must be reasonable, not a huge penalty.
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