What Real Estate Breach of Contract Damages Can You Expect in Maryland

When a buyer or seller breaches a contract for real property, the non-breaching party often find themselves in a precarious situation. Questions of whether or not a sale can be enforced are complex, and their answers are dependent on the facts and circumstances surrounding the case. The types of damages that are available are also largely contingent on what stage of the sales process the breach occurred in. If you are a party to a real estate contract that has been breached, you may be entitled to several legal remedies. Contact a Baltimore real estate transactions attorney at the Heyman Law Firm for an honest analysis of what your legal options are for potentially pursuing a claim.

What are the Essential Elements of Real Estate Contracts?

In order to understand what a breach of contract is and what kind of damages a non-breaching party is entitled to, it is important to know what the essential elements of a contract are. There are four elements that must be established in order for a valid contract to exist:

1. Offer
2. Acceptance
3. Consideration
4. Mutual Assent

An offer is a promise to act or refrain from acting. It is binding upon acceptance. Acceptance is the unequivocal agreement to the terms of the offer. In order for a contract to be legally enforceable, there must also be consideration. Consideration, or “benefit of the bargain,” is the value or benefit that both parties gain from entering into the contract. Lastly, a contract is legally binding when the above elements are met and when there has been a “meeting of the minds” between the parties. Both parties must have had the requisite intent to enter into a binding contract at the time of formation.

There are additional elements that must exist that are specific to real estate contracts. In compliance with the statute of frauds, contracts for sale of land must be in writing. The contract must also contain the following:

• List of the parties to the transaction
• Description of the property
• Legal purpose
• Purchase price of the property
• Signatures of all parties to the sale

Buyer’s Breach of Contract Remedies

If a buyer breaches a contract for sale of real estate, a seller generally has three options:

1. Keep the earnest money deposit
2. Sue for specific performance
3. Sue for monetary damages

The earnest money deposit is the amount of money that a buyer puts down up front in a contract for sale of real estate. It is usually a very small percentage (2-5%) of the purchase price. It is a representation of the buyer’s good faith and seriousness towards the purchase of real property. Sometimes, there will be a liquidated damages clause contained in the contract that allows for a seller to keep the earnest money deposit in the event of a breach by the buyer. For this reason, it is important for the seller to negotiate for a larger deposit prior to signing the contract.

Specific performance is an equitable remedy that is only available in real estate and sale of goods. It is granted when the subject matter of the sale is unique and monetary damages are too difficult to calculate. An award of specific performance in the event of a buyer’s breach would enforce the buyer to close on a home. This is typically not the best remedy for a seller to pursue because when buyers breach, they often do so for financial reasons, so it might be impossible to compel them to fulfill their contractual obligations to close.

If the earnest money deposit does not justly compensate the seller for damages, a suit for monetary damages is a viable option for sellers. The amount of damages that a court may choose to award include the difference between the contract price of the home and its fair market value at the time of the breach and/or interest accumulated from the date of default. A Maryland real estate attorney can offer you guidance that is tailored to your position as a seller or buyer.

Seller’s Breach of Contract Remedies

If a seller breaches a contract for a real property sale, the buyer has the following options:

• Sue for specific performance
• Sue for monetary damages

Courts have the authority to award specific performance in cases where money damages are inadequate remedy for the damages that the plaintiff has incurred. Specific performance is available as a remedy when the following exist:

1. A binding and enforceable contract
2. Reasonable and certain terms
3. Mutuality of obligation and remedy
4. Freedom from fraud and overreaching; and
5. Lack of remedy at law

A buyer may choose to sue for monetary damages if a seller breaches a contract for sale of land. Damages that a seller could seek include costs of applying for a loan, damages from the buyer’s reliance on the property being available, and other associated costs.

Baltimore Breach of Contract Lawyer

If you are party to a real estate contract that has been breached, get in touch with an attorney right away. The Baltimore breach of contract attorneys at the Heyman Law Firm have experience litigating disputes over real estate, and they fight tirelessly for their clients to recover the compensation they deserve. Call the Heyman Law Firm today at (410) 305-9287 and schedule a confidential consultation with an attorney you can trust.