Understanding Breach of Real Estate Contracts in Tennessee
When engaged in real estate transactions in Tennessee, contracts establishing the goals and roles of those involved are vital. Real estate contracts bind the involved parties (sellers and buyers). Each party is legally obligated to fulfill its contractual duties. If a party fails to fulfill its contractual obligations, it may constitute a breach of contract. A breach of a real estate contract can be extremely costly to the non-breaching party in several ways. Fortunately, in Tennessee, if a party breaches a real estate contract, it may be possible for the affected party to take legal action. In this article, we discuss the types of breach of real estate contracts in Tennessee, how a breach can be proven, the remedies available for breach of real estate contracts, and the steps to take if a breach occurs.
Types of Breach of Real Estate Contracts
There are four main ways in which a real estate contract can be breached in Tennessee, as discussed below;
- Minor or Partial Breach
A minor or partial breach is the least serious type of real estate contract breach. It is also known as an immaterial breach. This type of breach arises when one of the parties to the breach fails to meet their obligations, but the other party still gets what they were to get.
- Actual Breach
When a party fails to fulfil their obligations under the contract, it is considered an actual breach.
- Material Breach
According to TennesseeCourtRecords.us, a material breach occurs when one of the parties fails to meet their contractual obligations, rendering the contract irreparable.
- Anticipatory Breach
This type of breach arises when a party indicates, either through words or actions, that they don’t intend to fulfil their contractual obligations.
Proving a Breach
In Tennessee, the party claiming that a breach of real estate contract occurred must prove the following elements to succeed in their legal claim;
- A valid contract
- They performed their contractual obligations, they were ready and able to do so, or they were justified in not performing their obligations
- The defendant failed to meet their contractual obligations
- Damages or financial harm suffered as a result of the breach
Sufficient evidence is necessary to prove the above elements. Evidence can include the contract, payment receipts, communication records, and other documents showing compliance or non-compliance.
Remedies for Breach of Real Estate Contracts
When a breach of contract happens in Tennessee, the following are some of the possible remedies;
- Compensatory Damages
The breaching party may be required to compensate the non-breaching party for financial losses suffered due to the breach, such as lost profits or out-of-pocket expenses.
- Liquidated Damages
This is an agreed-upon amount payable in the event of a breach. It is contained as a clause in the contract.
- Specific Performance
When monetary damages are insufficient, the breaching party may be compelled to fulfill their contractual obligations.
- Cancellation
Sometimes the best remedy is to terminate the real estate contract. In such cases, the parties are restored to their pre-contract positions.
Steps To Take if a Breach Happens
The following are the steps to take if a breach of real estate contract occurs;
- Review the contract
- Gather evidence
- Attempt resolution through negotiation or mediation
- If informal resolution fails, consult a real estate attorney
Contact Us for Legal Help
If you need help protecting your rights, contact a skilled Knoxville real estate attorney at Reynold, Atkins, Brezina & Stewart, PLLC.
