Equitable Remedies in Real Estate Lawsuits

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 What Is a Remedy?

In legal terms, a remedy is a form of compensation that is given to an individual through a legal proceeding. Remedies are given to restore injured or aggrieved individuals to the position that they were in before the wrongful action or injury occurred.

Remedies can be placed into one of two general categories, equitable and legal. An equitable remedy is a non-monetary solution that resolves a disputed issue.

A legal remedy allows a non-breaching party to recover monetary damages. In addition to these types of remedies, a court may also order a declaratory judgment.

With a declaratory judgment, the court determines individual rights in a dispute without awarding damages.

What Is an Equitable Remedy?

An equitable remedy is a distinct remedy that can be obtained in certain legal cases, including breach of contract cases. An equitable remedy is an action the court orders to resolve a dispute or breach.

This remedy is typically granted when a legal remedy or monetary compensation is insufficient to resolve the wrongdoing. Legal damages must typically be unavailable before a court will issue equitable relief.

Examples of equitable remedies may include:

  • Specific performance: This is a court order that requires the party in breach to completely perform their part of the bargain according to the contract;
    • For example, this may include requiring the breaching party to deliver goods that have already been paid for or to render payment for services;
  • Contract rescission: This is where the old contract that was breached is rescinded or canceled;
  • Contract reformation: This is where the contract is rewritten to reflect each party’s true intentions more accurately. The remedy of reformation requires that a valid, working contract be in existence because, otherwise, there is nothing to rewrite;
    • Reformation is often ordered if there is a mistake or misrepresentation in one of the contract terms;
    • A contract may be reformed in whole or in part;
    • Reformation is sometimes referred to as rectification;
  • Injunction: This is a court order that demands a party stop doing a specific act because the act is causing irreparable injury to the plaintiff, which monetary damages cannot replace; and
  • Constructive trust: This arises where a defendant wrongfully obtained the plaintiff’s property, and the defendant has used the plaintiff’s property to increase the value of their own property.

What Are Equitable Remedies in Real Estate Lawsuits?

Generally, the remedies in a lawsuit are the relief that is sought by:

  • An individual;
  • Multiple individuals;
  • A group or organization.

A breach of contract case is a type of civil lawsuit. In these cases, the court may impose a remedy in order to enforce rights that have been infringed upon.

Typically, a court will impose a legal remedy to put the non-breaching party in the position they would have been in had the agreement between the parties been completed. Monetary relief is one common example of a legal remedy.

The party that breaches an agreement may be required to pay a court-ordered monetary penalty to compensate the non-breaching party for their losses or to punish the breaching party. A real estate lawsuit is typically a breach of contract matter.

The court may determine that a legal remedy is not the best solution in these cases. Instead, the court may impose an equitable remedy to resolve the real estate lawsuit.

The underlying idea of equitable remedies is rooted in fairness to the parties.

What Are Examples of Specific Performance?

Specific performance is an equitable remedy where the court orders the breaching party to perform a specific act per the contract to which they were a party. For example, if a homeowner enters into a binding contract to sell their home to another party, but the potential purchaser no longer wants to buy the home, the court will examine the contract terms and determine whether or not to impose specific performance.

In many real estate contracts, provisions are included for these issues where a potential buyer puts down earnest money, similar to a deposit, in case they decide to back out of the sale. The court will examine the original agreement in order to determine if it is valid.

If the contract is deemed valid, the court will consider the terms of the earnest money provision. It is also common for real estate contracts to include contingency periods that allow a potential purchaser to back out of the contract during a certain period if the required conditions are not met.

The specific performance of being forced to continue with the sale of property may not always be an option in real estate cases if there is a valid alternative, such as the existence of earnest money as a remedy for the breach of the real estate case.

It is up to the court to determine whether specific performance is an appropriate remedy in a breach of real estate contract case.

What Are Examples of Restitution?

In general, restitution means restoring something to its pre-existing or original condition. In a real estate contract dispute, when a contract is voided, the non-breaching party wants compensation for their lost money and time.

The court must examine the validity of the contract that is in dispute. Real estate breach issues are determined on a case-by-case basis.

A non-breaching party can only be compensated with a fair amount of restitution.

What Are Examples of an Injunction?

An injunction is another type of equitable remedy that may be available in a real estate lawsuit. An injunction is usually imposed upon a party to make them stop engaging in certain conduct.

If the party refuses to comply with the injunction, they may be held in contempt of court and risk being incarcerated. For example, a court may order an injunction if the selling party agrees to sell a parcel of land to a buyer and succinctly pursues and accepts an offer from a third-party purchaser.

In this case, the court may order an injunction to sell the property to a third party and may require the seller to sell the property to the original buyer.

What Happens if There Is a Breach of Contract?

A contract, such as a real estate agreement, may sometimes result in a dispute among the parties to the contract. A contract is a legally binding agreement made between at least two parties.

For a contract to be considered valid and binding, certain elements must exist, including:

  • A valid offer;
  • Acceptance of that offer;
  • The parties agree to all the terms of the contract;
  • The terms of the contract are clear; and
  • Both parties must provide consideration.

In most cases, a valid contract may be oral or written. Under the Statute of Frauds, however, a real estate contract must be in writing.

If the real estate agreement is in writing and has all the elements listed above, it will most likely be considered valid. If a party to the contract does not fulfill its obligations, a breach or violation of that contract occurs.

Arbitration, mediation, or a lawsuit may resolve a contract dispute between parties. Some contracts provide that disputes such as arbitration must be resolved in a certain manner.

Because of this, an individual needs to review their contract and consult with an attorney before taking steps to resolve their dispute in court.

Should I Call a Real Estate Attorney?

A real estate lawsuit is a complex issue that may be time-consuming and expensive. It may also have a lifelong impact on the parties who are involved.

If you are involved in a real estate dispute, it is essential to consult with a local real estate attorney who can advise you of the laws in your state. Your attorney can also advise you on what equitable remedies may be available in your case.


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