Consequences of Breaches of Commercial Real Estate Contracts
by Howard Ross on April 27th, 2021 in Real Estate Law
Purchasing the perfect commercial property can feel like finding a needle in a haystack, as the perfect commercial real estate can be exceedingly hard to find. Selling commercial property can also be full of challenges. The consequences of one party breaching a commercial real estate contract can result in frustrations as well as considerable losses for the other party.
When a seller breaches a contract and wants to keep hold of the property or sell to a higher bidder, a buyer may not only have financial losses due to the planned move and expansion but may also face considerable trouble finding another suitable property.
Likewise, if the buyer backs out, the seller has lost the expected proceeds of the sale, wasted precious time, and potentially turned down other offers. They will most likely have to start again from scratch, trying to find a buyer for their commercial property.
However, those involved in a commercial property transaction must remember that a contract is legally binding and the party who is negatively affected by the other party’s breach is generally entitled to seek damages and remedies.
If you have been affected by the breach of a commercial real estate contract, contact St. Petersburg Real Estate Attorneys, Ross & Pardun to get clear on your legal rights and remedies. Call us now to schedule a free consultation: (727) 381-2300
Why Do Parties Breach Commercial Real Estate Contracts?
Commercial real estate can include a wide variety of different properties such as:
- Retail spaces
- Office buildings
- Hotels and resorts
- Restaurants and bars
- Healthcare facilities
Since commercial real estate encompasses a wide range of buildings and facilities, breaches of contracts can occur for a variety of reasons. Parties may breach a contract due to:
- Legal complications with the deed or title of a property
- External or internal damage to the property
- A party other than the seller has partial ownership
- The buyer experiences financial issues
- The seller decides they want to keep the property
- The seller receives a higher offer
However, whatever reasons a party might have for breaching the contract, the non-breaching party generally has legal recourse and can pursue damages.The consequences of breaches of commercial real estate contracts can potentially impact both the buyer and the seller. Therefore, whether you are selling or buying commercial property, having a real estate lawyer protect your rights can give you peace of mind and reassurance that even if a deal falls through, your lawyer can protect you from some of the financial and legal consequences.
Generally, those involved in real estate transactions should consider consulting with an experienced real estate attorney before entering into any contract and sale transaction to ensure the relevant paperwork is legally valid.
Remedies Available for Those Affected by the Breach of Contract
If either party in a commercial real estate contract fails to adhere to the terms and conditions stated in the agreement, they have breached the contract. However, if you are affected negatively by a breach of contract, you could potentially seek several remedies. If a seller breaches the contract, the buyer could:
- Sue the seller for damages
- Terminate the real estate contract
- Insist on a return of the deposit
- Demand specific performance such as the completion of the sale
If the buyer has defaulted on the contract, the seller could:
- Keep the good-faith deposit
- Terminate the contract entirely
- Sue the seller for damages
- Insist on specific performance
What Is Specific Performance?
When it comes to commercial real estate contracts, either party may not be satisfied with monetary damages but insist on the actual performance of the contract. Specific performance is a way of “forcing” one party, typically the seller, to fulfill certain aspects of the contract. Specific performance is a court-ordered request for the defaulting party to perform a specific action which could be:
- Signing the real estate contract
- Signing the deed
- Delivering the deed to the buyer
Which Monetary Damages Could Be Available?
Monetary damages can be available to the party affected by the breach of contract, whether that may be the seller or the buyer. If either party backs out at the last minute, the other party could face significant costs. Monetary damages can include the difference between the agreed purchase price and the actual value of the commercial property in question. The party who has defaulted could also potentially be held to account for other damages such as lost profit damages.
Breach of commercial real estate contracts can cause severe inconvenience and monetary losses to both parties. If you have been affected by a breach of contract, an experienced real estate attorney can help you determine your legal rights and fight for what you deserve. Your lawyer can help you find legal recourse in court and pursue damages arising from a breach of contract.
Contact an Experienced St. Petersburg Real Estate Attorney for Help Today
Whether you are the buyer or seller in a commercial real estate transaction, an attorney can help you avoid headaches by handling your property transaction from beginning to end. Commercial real estate attorneys can help you with your transaction in several ways, including but not limited to:
- Providing legal advice and guidance
- Negotiating a sale or purchase
- Ensuring legal validity of the contract
- Analyzing a contract and flagging up any inconsistencies
- Handling title insurance matters
- Facilitate the closing
A real estate attorney can also help you with a number of other issues pertaining to commercial property including financing, zoning, tax issues, environmental considerations, and others.
Buying and selling any type of property can be a challenging and stressful experience, however, the issues surrounding commercial property sales and purchases can be particularly convoluted.
A dedicated real estate lawyer can help you make informed decisions and ensure you have all the legal information you need if the other party defaults on the contract or you are encountering any unforeseen issues.
You do not have to embark on the purchase or sale of commercial real estate on your own. We can help make your property transaction a smooth process and handle your sale or purchase from beginning to end. Contact St. Petersburg Real Estate Attorneys, Ross & Pardun today to find out how we can help you: (727) 381-2300.