breach of contract in real estate

Real estate transactions are typically governed by a series of contracts designed to protect all parties involved. Those contracts outline the responsibilities each party must satisfy and clarifies the details of the agreements you’re entering into. As any Minnesota real estate attorney can tell you, people don’t always stick to these contracts which can result in one or more parties being found to be in breach of contract. Let’s take a look at what this means and how you can avoid breaching your agreements.

How Breaches of Contract Happen in Real Estate Transactions

Breaches of contract happen when one or more peeople in the agreement violates the terms of the agreement or fails to uphold their end of the deal. This can look different depending on the type of real estate contract you’re trying to implement. But most real estate contracts can fall under two categories: rental agreements and purchase agreements. Here are some common instances that can lead to a breach of contract.

Breach of Rental Contract

Breaches of rental contracts can happen for several reasons and can be caused by both the landlord and the tenant. Some common causes for breaches of rental contracts include the following:

  • The tenant using the property in an unapproved way like subleasing to another tenant, taking on more roommates without landlord approval, or operating a business out of the rental.
  • The landlord failing to maintain the property so that it is safe and habitable.
  • The tenant causing damage to the property and refusing to repair it per the rental agreement.

Keep in mind that this is not an exhaustive list and can apply to both residential and commercial contracts. If you suspect that your tenant or your landlord is violating the terms of your rental contract, speak with a Minnesota real estate attorney immediately.

Breach of Real Estate Purchase Contract

Buying and selling commercial and residential property often requires an extensive real estate contract. And if the terms of that contract are not upheld, either the buyer or the seller could be found to be in breach. Here are a few common instances that can trigger a breach of contract:

  • The seller refuses to allow inspectors to examine the property as a condition of sale.
  • The buyer fails to pay the full amounts due.
  • The seller refuses to honor contingencies that they originally agreed to.
  • The property doesn’t pass the inspection.
  • The seller refuses to turn over the title and deed to the property at closing.

If you suspect any of these violations in your purchase agreement, consult with an attorney as soon as possible.

The Types of Contract Breaches Explained

There are different types of breach of contract that you may encounter, and those types can impact the types of damages you may receive. Here’s a quick overview:

  • Non-material: Non-material breaches are ones that are minor or inconsequential like leaving out an agreed-upon appliance in the contract. There are no significant damages and, often, these issues can be remedied through negotiation.
  • Material: Material breaches are ones that result in a documentable loss either to the buyer or the seller. This could be triggered by the buyer refusing to pay for the property at closing or the seller refusing to turn over the deed or allow the buyer to take possession of the property.
  • Actual: Actual breaches happen when one party clearly violates the terms of the contract. This could happen when a tenant refuses to pay rent or when a seller refuses to give the buyer keys to the property.
  • Anticipatory: Anticipatory breaches are ones that are likely to happen but haven’t happened yet. This could include the buyer or seller telling the other party that they’re not going to close on the property several days ahead of closing. 

How a Minnesota Real Estate Attorney Can Help

Breaches of contract in real estate transactions can make buying or selling a property more difficult and could entitle you to damages. Your Minnesota real estate attorney can review your case and help show that you’re entitled to compensation. Contact Waypoint Law today to schedule a consultation.