Prior to the consummation of a property transaction, the buyer can back out of the contract at several points based on contingencies in the agreement. These contingencies, which are generally related to financing or home inspection issues, can be the basis of a rescinded contract. In many cases, the buyer is not in breach of contract when a particular contingency occurs. For example, if the prospective buyer made a good faith attempt to secure adequate financing and was unable to do so, then the contract is no longer in effect and the buyer is not liable for breach of contract.
The seller has cause for an action for breach of contract when the prospective purchaser has declined to close and such refusal is not justified by a contingency occurring. In this situation, the seller may cancel the contract and retain the earnest money. The seller’s right to keep the earnest payment is generally enforceable even if it exceeds the amount of damages suffered by the seller as a result of the breach of contract. The seller can then bring an action against the purchaser to recover monetary damages. The damages awarded by the court usually equals the difference between the contract price and the market value of the property when the breach took place, less any amount that has already been paid.
The terms of the purchase agreement may limit the type of remedy that the seller can pursue. The contract may also restrict the seller to a single remedy so that he cannot pursue other means of relief. For example, if the contract contains a liquidated damages clause, which is an amount designated at contract formation to be paid to the non-defaulting party upon breach, then the contract may prevent the seller from seeking further relief after liquidated damages have been paid. In addition, specific performance is generally not available to the seller, although a buyer may request specific performance when the seller has breached the contract. In Georgia, specific performance is considered an extraordinary remedy that is rarely granted.
The experienced team of attorneys at the Law Offices of Mark Weinstein, P.C. can help you litigate your real estate claims. Contact Mark Weinstein and his colleagues at (770) 888-7707 or visit them at http://www.markweinsteinlaw.com to find out how they can advise you.