What Happens If a Real Estate Contract Is Breached in New York?

This blog post delves into the intricacies of real estate contract breaches in New York, offering insights and solutions with the expertise of Chiariello & Chiariello.

What Constitutes a Breach of Contract?

A breach of contract in real estate occurs when one party fails to fulfill their obligations as set forth in the agreement. This can manifest in various ways, disrupting the process and potentially leading to legal disputes. Common examples of breaches include:

• Failure to Close on Time: While New York generally adheres to “on or about” closing dates, if either party declares “time of the essence” and the other party fails to close, it can be considered a breach.
• Mortgage Contingencies: Generally, mortgage contingencies in New York contracts require the purchaser to advise the seller by a set deadline if they cannot obtain financing. If the buyer fails to provide this notice, they will be in breach if they cannot proceed with the sale.
• Title Defects: The seller must provide a clear title as well as proper certificates of occupancy for the structures upon the property; failing to do so can be considered a breach if there is no alternative remedy in the contract.

Understanding these types of breaches helps parties recognize when a contract has been violated, prompting timely legal action.

Remedies for the Non-Breaching Party

When faced with a breach of contract, the non-breaching party has several remedies at their disposal. The choice of remedy depends on the circumstances and the severity of the breach. Key options include:

• Specific Performance: This legal remedy compels the breaching party to fulfill their contractual obligations by transferring the property to the buyer upon payment of the sale price. It’s often used when a party fails to close on time after a “time of the essence” closing is declared.
• Monetary Damages: Often, if the seller is the non-breaching party, he can seek compensation for losses incurred due to the purchaser’s breach. This may include forfeiture of the buyer’s downpayment or other costs related to finding a new buyer.
• Rescission: This option allows the contract to be canceled, relieving both parties of their obligations and potentially leading to restitution.  It is far less common, but if there is a mutual misunderstanding regarding the transaction of if the parties agree, a contract may be rescinded.

Choosing the right remedy involves careful consideration and often requires legal guidance to ensure the best outcome.

Legal Considerations in New York

New York’s real estate laws impose specific requirements and clauses that can impact how breaches are addressed. As noted above, contracts may include a “time is of the essence” clause, which emphasizes the importance of meeting deadlines for closing. Failure to adhere to these deadlines can lead to significant legal consequences. Additionally, New York courts typically require clear evidence of a breach, underscoring the importance of thorough documentation and communication throughout the transaction.

Case Studies or Examples

Examining real-life cases of contract breaches provides valuable lessons. Many cases involve repeated failures to close title in a timely fashion. In one case we recently handled, the seller failed to appear for a “time of the essence” closing date and the Supreme Court required him to proceed with the sale, even allowing the local Sheriff to transfer the property if he refused. In other instances, a buyer has been compelled to forfeit his downpayment because he did not get a mortgage on time and never notified the seller’s attorney in accordance with the mortgage contingency clause.

These examples underscore the importance of clear communication and adherence to contract terms to avoid costly legal battles.  While many attorneys handle property transactions, Chiariello & Chiariello also handles real estate litigation – giving you extra insight into what issues may arise leading to a breach.

Preventing Breaches

Preventing breaches begins with meticulous contract drafting, review and clear communication between the parties. Here are some tips to avoid breaches:

• Thoroughly Review Contracts: Ensure all parties understand their obligations and the consequences of failing to meet them.  Make sure the contract accurately reflects the particular transaction in question – every property is unique.
• Maintain Open Communication: Regular updates and discussions can preempt misunderstandings.
• Seek Legal Advice: Consulting with experienced attorneys, like those at Chiariello & Chiariello, can help identify potential issues and ensure contracts are drafted to avoid potential pitfalls.

Proactive measures can save time and resources by preventing disputes before they arise.

Chiariello & Chiariello’s Expertise

Chiariello & Chiariello stands out with their extensive experience in handling real estate closings and disputes in New York. Their team provides personalized legal guidance, ensuring clients are well-informed and prepared to address any contractual challenges. Whether you’re facing a breach or seeking to draft a solid contract, our attorneys are ready to assist. For more information and to schedule a consultation, visit our Contact Us page.

Conclusion

Real estate contract breaches can have significant implications, but understanding your rights and remedies allows you to navigate these challenges effectively. With the expertise of Chiariello & Chiariello, New York residents can confidently address breaches and secure their real estate investments. Legal guidance is invaluable in these situations, ensuring that your interests are protected and your transactions proceed smoothly.

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