What are real estate contracts?
A real estate contract can have many nuances. It can be a lease, purchase or rental of a commercial or residential property, an office, a warehouse, etc. If one 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 calculated 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 determined by the value of recoverable damages, which is generally referred to as expected damages. If the contract price is equal to the market value, damages that are calculated simply by expectations will not be awarded.
Are there other types of recoverable damages?
Even if the expected damages are not recoverable, the non-defaulting party can recover other types of damages. Some of the most typical include:
- Damage caused
- Nominal damages
- Specific performance
Are there any limitations to a damage recovery?
Several limitations apply to recovering damages:
- Foreseeable damages: the offending party must be able to foresee that damage is likely to occur. Example, a seller breaches a contract to sell a house. The seller would have to pay damages to the buyer for hiring removals, buying new furniture, or other consequential damages.
- Certainty: damages must be proven with certainty. Example, claiming that you suffered emotional distress because you wanted an agreement to be honored is not measurable. As a result, no damages will likely be awarded.
- Duty to mitigate: the party that does not default has the duty not to extend the loss suffered. Example, a seller breaches a contract to sell a house. The buyer (non-defaulting party) cannot continue to arrange to move into the home and then sue to recover all expenses such as damages.
If you have been affected by damage and cannot find an acceptable solution, you should consult a lawyer, who will advise you and help you recover your money or your peace of mind.