It makes sense to feel confused and overwhelmed during the home buying process. You might find that this rings especially true during the time you're trying to decide home offer contract terms. In the event that the seller backs out of your contract, what's the next course of action?
Including a clause in your contract that will allow you some sort of remedy should the seller breach is a good way to protect yourself. What would you rather have: money or a means by which to force the seller to honor the contract? It's essential here to know the difference between liquidated damages and specific performance.
You're probably most familiar with liquidated damages because they're a basic monetary sum that a party agrees to during the writing of the contract. If you happen to be the party hurt by the contract's breath, they exist to compensate you for a certain type of breach. The time during the writing of the contract is most ideal to determine the damages amount in order to avoid a dispute in the event that a breach actually takes place. If you don't happen to list an actual amount, a legal court can also make the determination on how much the non-breaching party can most appropriately receive.
An equitable remedy is also known in the legal sphere as specific performance, on the other hand. The breaching party is thus required to perform an act that would remove the existence of a contractual breach instead of paying out a monetary sum to the injured party. Specific performance takes the form of a court order that requires the breaching party to engage in whatever act the contract originally specified. It allows the injured party to receive justice since it is considered equitable. Agreeing to sell the house contracted for after the seller refuses to actually sell it is the most likely act a court will require a breaching party to perform.
You need to take into account a myriad of different elements when writing an offer then. The event, any damages you might anticipate and the specific scenario for which you're writing the contract in the first place are all relevant factors. Since they are construed as a penalty for a breach of a contract, liquidated damages are easier for a court to award. The only time specific performance is usually awarded is when good faith is involved during the contract's formation and a subsequent breach occurs. Monetary damages must also be an inadequate remedy as an added factor, as well. You should discuss every possibility with a real estate agent or attorney first to ensure you put the right type of clause in your home offer contract.
Including a clause in your contract that will allow you some sort of remedy should the seller breach is a good way to protect yourself. What would you rather have: money or a means by which to force the seller to honor the contract? It's essential here to know the difference between liquidated damages and specific performance.
You're probably most familiar with liquidated damages because they're a basic monetary sum that a party agrees to during the writing of the contract. If you happen to be the party hurt by the contract's breath, they exist to compensate you for a certain type of breach. The time during the writing of the contract is most ideal to determine the damages amount in order to avoid a dispute in the event that a breach actually takes place. If you don't happen to list an actual amount, a legal court can also make the determination on how much the non-breaching party can most appropriately receive.
An equitable remedy is also known in the legal sphere as specific performance, on the other hand. The breaching party is thus required to perform an act that would remove the existence of a contractual breach instead of paying out a monetary sum to the injured party. Specific performance takes the form of a court order that requires the breaching party to engage in whatever act the contract originally specified. It allows the injured party to receive justice since it is considered equitable. Agreeing to sell the house contracted for after the seller refuses to actually sell it is the most likely act a court will require a breaching party to perform.
You need to take into account a myriad of different elements when writing an offer then. The event, any damages you might anticipate and the specific scenario for which you're writing the contract in the first place are all relevant factors. Since they are construed as a penalty for a breach of a contract, liquidated damages are easier for a court to award. The only time specific performance is usually awarded is when good faith is involved during the contract's formation and a subsequent breach occurs. Monetary damages must also be an inadequate remedy as an added factor, as well. You should discuss every possibility with a real estate agent or attorney first to ensure you put the right type of clause in your home offer contract.
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