What Happens When A Real Estate Contract Is Breached

For most people, buying real estate is one of the most significant financial decisions of their lives. In addition to the substantial amount of money changing hands, people invest a lot of their time into the process. Some deals are contingent on the buyer selling their home. If, for example, a buyer breaches a contract, there could be severe consequences for the buyer and even the buyer’s buyers. 

What Is A Breach

The first question you should ask is whether your contract is enforceable. A contract is a legal document that must demonstrate that the buyer made an offer, and the seller accepted it. There will also be terms and conditions that outline the terms for how the transaction will occur. These are also known as considerations.

Material Breach

If either you or the other party doesn’t adhere to the contract, you may hear the phrase, “material breach.” Think of this as a blanket term that means one side did something that prevents the other from fulfilling their obligations. For example, if the buyer’s loan falls through, they will likely be unable to pay the seller—and the seller will no longer be able to fulfill their end.


One likely result is that the party that was not in breach could receive financial compensation. This does not mean there needs to be a lawsuit either. If you have already bought a home or are familiar with the process, you know there is language in the contract regarding what money the seller keeps if the buyer breaches—e.g., the deposit. 

As mentioned before, there are a lot of moving pieces in a real estate transaction. It’s one of many reasons why people have attorneys during the process. A buyer may request that their earnest money be returned in addition to any money they lost due to the breach. These are known as liquidated damages

Both the buyer and seller have the potential to lose money that is indirectly related to the deal. For example, what if the buyer can no longer sell their own house or have already paid for movers? This is money that is sought outside of the previously mentioned liquidated damages. 

Cueto Law Group

For further questions regarding real estate, contact the Cueto Law Group to schedule a consultation. Your real estate transaction is too important to trust anyone else. Let us represent you and your interests, so you can focus on enjoying this momentous time in your life.

Cueto Law Group P.L.