Real estate and property law encompasses a wide variety of topics, including:
- Using; and
- Leasing residential and/or commercial property.
Real estate and property law also addresses the financial aspects of real property, such as:
Additionally, wills and trust law can fall under the complete umbrella of real estate and property law. However, they may also be separated as their own minor subtopic of estate law.
In terms of disputes, some common examples of real estate and property law disputes involve:
What Are Real Estate Installment Payments?
According to real estate law, installment payments are a significant part of specific real estate contracts, namely land contracts or contracts for deeds. A contract for deed agreement is a type of legal document permitting the person who is buying a house to make monthly installment payments to the seller, until the property has been paid off in full. These agreements can be useful for homebuyers who either do not qualify for standard loans, or need a quick way to pay for property.
Real estate installment payments are considerably less costly and quicker when compared to using a mortgage to finance a home. Through real estate installment payments, the homebuyer can skip the mortgage and loan process altogether, and can avoid fees and long application processes.
Contract for deed has the homebuyer directly entering into a contract with the seller, in which the seller will agree to provide financing to the buyer for the property. Another way of putting it is that the seller is financing the sale of their own house. Instead of a mortgagor or third party providing the financing or loan, the seller provides the financing. This arrangement requires much negotiation and planning between the two parties; a land contract will govern the terms of payment and other details.
What Are Some Common Examples Of Disputes Associated With Real Estate Installment Payments?
Disputes over installment payments in land contracts are due to many factors. Some common examples of disputes that are associated with real estate installment payments include, but may not be limited to:
- Non-payment or late payments by the buyer or borrower;
- The seller changing payment or interest amounts;
- Failure to obtain agreements in writing, as real estate laws generally require such transactions and agreements to be in writing;
- The seller fails to convey title to the property at the proper time, as sellers are generally obligated to do so after the installment payments have been completed; and
- Various breach of contract issues, which will be further discussed below.
Other disputes in a land contract may include:
- Improper use of the property;
- Various issues with the title, such as a title defect; and
- Fraud associated with financing details.
What Is A Breach Of Real Estate Contract?
A breach of contract occurs when the party to a valid contract fails to fulfill their portion of the agreement. If a party does not adhere to the instructions of the contract, the non-breaching party may be allowed to take legal action and file a lawsuit in court. A breach of contract can be partial or complete.
As previously discussed, a real estate contract is a document which contains the many terms and conditions associated with a contract for the sale or purchase of real estate. According to real estate contract laws, a breach of a real estate contract occurs when one party to the contract fails to perform any of the contract terms.
The most common breach in a real estate contract is associated with a real estate transaction; because these types of contracts involve the transfer of real property, they are required to be written and signed in order to comply with the Statute of Frauds. Meaning, they cannot be oral contracts.
Every purchase contract contains essential terms in boilerplate language, which are prepared by the local Realtor’s Association. These terms may differ from state to state, or even from county to county. Generally speaking, all real estate purchase contracts include the following terms:
- The purchase price of the property;
- A good faith deposit for the property;
- How the property will be funded, specifically the loan amount as well as the down payment amount;
- The address of the property in question;
- The date or amount of days before the sale is finalized, which is also known as the closing date;
- The items which are included and excluded from the sale; and
- Which party is responsible for any taxes and additional expenses.
There are many ways in which a breach of contract may occur. Some common examples of real estate breach of contract include, but may not be limited to:
- Failure to pay on time, such as failing to close escrow in the amount of time specified;
- Failure to correctly deliver the deed of property;
- Renting a unit that does not comply with the implied warranty of habitability; and
- Unauthorized subletting of a rental property, in either a residential or a commercial lease.
One of the largest concerns associated with a land contract is how to remedy an apparent breach of the payment terms. Because most land contracts involve monthly installments, legal action may be required if the buyer misses a payment. Additionally, many jurisdictions will penalize the buyer and require them to make up for missed payments.
However, if it appears that they will not make good on future payments either, it could indicate a breach of the entire contract. Under these circumstances, more serious measures may be imposed by the court. An example of this would be placing a lien on the breaching party’s property, in order to compensate for the missed payments.
In order to avoid legal issues later on, the contracting parties should make specific mention of the legal penalties associated with a breach when they draft their original land contract.
What Are Some Legal Remedies For Installment Payment Disputes?
As with other real estate contract violations, a breach of installment payment terms can result in legal consequences, such as a damages award for the non-violating party. This is intended to cover losses such as those resulting from non-payments, or from accumulated late payments. Other remedies, such as a court requirement that the parties rewrite some of the terms in the contract, may be available.
Many purchase contracts have alternative dispute resolution options, such as mediation, which must be attempted prior to taking the issue to court. However, these clauses are only included if the parties sign that term.
If the non-breaching party is the buyer, remedies may include:
- Suing the seller for monetary damages;
- Terminating the contract and requesting a return of the good-faith deposit, plus the payment of any reasonable expenses; and/or
- Specific performance of the agreement.
If the non-breaching party is the seller, the seller can retain the good-faith deposit, as well as:
- Terminate the contract;
- Sue for breach of contract to obtain money damages; and/or
- File a lawsuit for specific performance.
Do I Need A Lawyer For Real Estate Installment Payment Disputes?
If you are involved in a real estate installment payment arrangement, and are experiencing any disputes, you should consult with a local real estate lawyer. An attorney will be best suited to helping you understand your state’s specific laws regarding real estate laws, and can represent you in court as needed.