When a party breaches a contract for the sale of a home or a lot, the non-breaching party is entitled to certain remedies for breach of land sale contract, including damages. In this case, damages would be the difference between the contract price and the market value of the land on the date of the breach, plus any incidental costs.
An example of an incidental cost to the buyer would be rent payments made elsewhere while waiting to move. For the seller, it might be the cost of utilities or any accruing taxes.
To obtain specific performance, a plaintiff must show (1) that a contract exists, (2) that the plaintiff has performed or is ready, willing, and able to perform, (3) that the legal remedy is inadequate, (4) that enforcement is feasible, and (5) that there are no defenses available to the defendant.
The issue with seeking specific performance is usually in proving the third element, that the legal remedy is inadequate. Generally, the legal remedy is inadequate when an item for sale is unique.
Because land is always unique, specific performance is an available remedy. Specific performance here would be the forced sale of a home. So the court would essential force the buyer to transfer funds to the seller or force the seller to transfer possession of the premises to the buyer.
Real estates sales contracts usually require the buyer to deposit “earnest money” into an account with the seller. They also frequently provide that if the buyer defaults in performance and fails to make payments, the seller may retain the earnest money as liquidated damages.
Liquidated damages must be agreed to in a contract and cannot be punitive in nature. Courts generally uphold the seller’s retention of the earnest money if the amount appears to be reasonable in light of the seller’s anticipated and actual damages.
If you have any questions about your contracts or would like to discuss the sale of property, contact one of our experienced Florida business law attorneys today.