Common Types of Contract Disputes in Real Estate Transactions
Real estate contracts are legally binding agreements, but disputes can arise when one or more parties fail to fulfill their obligations, misunderstand the terms, or encounter unforeseen issues. Below are some of the most common types of disputes that can occur in real estate transactions and how they may be addressed under California law.
Breach of Contract
A breach of contract occurs when one party fails to meet the terms outlined in the agreement. Common breaches include:
- Failure to Close Escrow: When one party does not complete the transaction by the agreed-upon closing date.
- Missed Timelines: Delays in performing actions required by the contract, such as providing documents or completing inspections.
Relevant Law
California Civil Code Section 3300 allows for recovery of damages resulting from a breach of contract, including compensation for financial losses.
Misrepresentation of Property Condition or Other Material Facts
Misrepresentation occurs when a party provides false or misleading information about the property. This can include:
- Concealing known defects, such as structural damage, water leaks, or pest infestations.
- Providing inaccurate information about the property’s size, zoning, or history.
- Failing to disclose environmental hazards or other material facts.
Relevant Law
California Civil Code Section 1572 defines actual fraud, including intentional misrepresentation, concealment, or false promises made to induce another party to contract.
Disputes Over Financing Contingencies
Financing contingencies protect buyers by allowing them to back out of the transaction if they are unable to secure funding. Common disputes include:
- Sellers refusing to honor the contingency despite the buyer’s good-faith efforts to obtain financing.
- Buyers failing to notify sellers of their inability to secure financing within the contingency period.
Relevant Law
Financing contingencies are governed by the terms of the specific real estate contract, often using the California Association of Realtors (C.A.R.) Residential Purchase Agreement. Disputes may be resolved under contract law principles outlined in California Civil Code Section 1688.
Boundary or Zoning Issues Not Addressed in the Agreement
Real estate contracts should address any known boundary disputes, easements, or zoning restrictions that could impact the property. Disputes can arise when:
- The buyer discovers encroachments, such as fences or structures crossing property lines.
- The property’s zoning restricts the buyer’s intended use, and this information was not disclosed.
Relevant Law
California Civil Code Section 1102 requires sellers to disclose material facts about the property, including issues related to boundaries and zoning.
Ambiguities in Contract Terms
Poorly drafted contracts with vague or ambiguous language often lead to disputes about scope, responsibilities, or timelines. Common examples include:
- Disagreements over what repairs the seller is obligated to complete before closing.
- Misunderstandings about included fixtures or appliances.
Relevant Law
California Civil Code Section 1638 states that contracts should be interpreted to give effect to the parties’ intent, as evidenced by the language of the agreement. Courts often resolve ambiguities by considering the plain meaning of the terms and the context in which the contract was formed.
How Bay Legal, PC Can Help
At Bay Legal, PC, we have extensive experience resolving real estate contract disputes. Whether through negotiation, mediation, arbitration, or litigation, we can help you address disputes effectively and protect your interests.
Contact us today for a consultation to discuss your case and learn how we can help resolve your real estate contract dispute.
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