Strategies to Mitigate Breach of Contract When Selling the House

October 10, 2023
Divorcing litigants face many liabilities when they sell the house. Generally, in every real estate transaction, the owners enter into two contracts: 1) A listing agreement with the brokerage and 2) a purchase agreement with the buyers. Each contract comes with terms and timelines that could cause your client potential problems.

4 Common Issues:
  • Disclosures: A seller must provide a buyer with known material facts (disclosures) within an established timeframe when an offer is accepted. If one party does not comply within that timeframe, the sellers are in breach of the contract.
  • Inspections/Appraisals: A seller has a contractual duty to make the house available for inspections and appraisals. If a seller does not allow access to the property within that timeframe, the sellers are in breach of the contract.
  • Personal Property: Contractually, the house is to be free and clear of personal property when delivered to the buyer. If one party moves “their” stuff out and the other spouse does not retrieve their belongings before buyers take possession, they are in breach of the contract.
  • Occupancy: The date and time for the change of possession is in the contract. Delayed occupancy is not a unilateral decision.
Damages When Clients Breach Contract:

Damages can be significant. If buyers lock in their interest rate and there’s a breach that causes them to exceed the rate lock, then their interest rate will increase. Extrapolate that increase over the life of a 30-year loan, and you could see six figures in possible damages.

If a Seller has left personal belongings behind, there is a cost to hauling it away: hundreds or thousands of dollars, depending on what’s left behind.

Buyers have made arrangements to move. They’ve given notice at their current residence or sold it. They have movers, contractors, designers, and furniture delivery schedules and have made various deposits. When there is even a one-day delay, all of this gets unraveled, and damages ensue to thousands of dollars.

Contractually, the parties on title are the ones liable. The liability can extend to both, even if one has been cooperative. Alternatively, if there’s one party on the title then that is the party with whom the purchase agreement is entered into, and they can bear all the contractual liability.

In Conclusion:

As a licensed real estate agent in California with over 19 years of experience and a designation as a Certified Divorce Real Estate Expert (CDRE), my role is to assist couples and their divorce teams, including mediators, attorneys, and financial analysts, in safeguarding the equity in the marital home.

Being a CDRE means I’m also specially trained to offer real estate guidance and support to the courts when they need expert testimony or documentation to support and educate for the cases at hand.

Call me if you’re going through a divorce or you’re representing someone going through a divorce. I’ll be happy to offer guidance or even take the real estate aspect of the case off your plate.

DRE #01422955

DRE #01526679

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