Real estate investing can be a tricky business, but for all its complexity…there are three common types of lawsuits that those of us experienced in the field see most often. These three types of lawsuits are: breach of contract by the buyer in the transaction, breach of contract by the seller in the transaction, and non-disclosure of significant property deficiency.
In any property transaction, the buyer and seller should enter into a legally binding purchase agreement. If, after the purchase agreement has been signed, the property owner decides not to sell the property that is currently under contract to the buyer, you have a breach of contract by the seller. Contracts are signed in good faith. The buyer of the property has every right to file a breach of contract lawsuit against the seller if they back out of the deal after the agreement has been made. The reason behind the change of heart regarding selling the property does not come into play. The only issue is that the terms of the real estate contract were broken. They were not implemented as agreed.
The terms of the real estate contract actually hold both the buyer and the seller to the agreement. In situations where the buyer has a change of heart and backs out of the deal after the contract is in place, the inspection grace period has expired and their deposit is no longer refundable, it is called a breach of contract by the buyer. In this case, loss of the buyer will typically be limited to the amount of money that was placed in escrow on account of the pending transaction.
The third common type of real estate lawsuit filed in California is the non-disclosure of significant property deficiency lawsuit. In this suit, claims are typically made that the previous owner did not disclose significant deficiencies to the buyer of the property that, if made known to the buyer, would have prevented them from purchasing the property in question according to the terms of the real estate purchase agreement. In most cases, the previous owner could be offered the opportunity to fix or pay for the deficiency to be repaired.
If you have questions regarding common types of real estate lawsuits in California or if you are in the midst of one of the situations presented above, contact the experts in land use and real estate law at The Law Office of Retz & Aldover LLP today.