What is a Real Estate Contract?

A real estate contract can take many forms. It can be a lease, a purchase, or rental of a commercial or residential property. If a party breaches the contract, the other party can sue for damages. Damages refer to a sum of money used to compensate a party for the loss suffered as a result of the breach of contract.

How are Damages Computed in Real Estate Contracts?

Every property, house, or building has a market value. However, the contract price may be different from the market value. In real estate contracts, the difference between the market value and the contract price is the recoverable damages. The recoverable damages are called expectation damages. If the contract price is equal to the market value, no expectation damages will be awarded.

Are There other Types of Recoverable Damages?

Even if expectation damages aren't recoverable, the non-breaching party can still recover other types of damages. Some of the more typical ones include:

Are There any Limitations to My Recovery of Damages?

Several limitations apply to recovery of damages:

  • Foreseeable damages: The breaching party must be able to foresee that the damages will likely occur. For example, a seller breaches a contract to sell a house. The seller would have to pay damages to the buyer for hiring movers or buying new furniture since such actions are very likely to occur.
  • Certainty: Damages must be proved with certainty. For example, claiming you suffered emotional distress because you wanted a deal to go through "really badly" is not measurable. As a result, no damages will likely be awarded.
  • Duty to mitigate: The non-breaching party has a duty not to amplify the loss suffered. For example, a seller breaches a contract to sell a home. The buyer (non-breaching party) cannot continue to make arrangements to move into the house and then sue to recover all the expenses as damages.

Do I Need a Lawyer to Recover Damages for a Breach of a Real Estate Contract?

If you think you are entitled to damages, an experienced real property attorney can help you sue the breaching party. If you are being sued for damages, a real estate lawyer can help you mount an effective defense.