Remedy when a Buyer Breaches Contract

Remedies in Illinois When Buyers Breach Real Estate Sales Contracts

Unfortunately, contracts for the sale of a home often fall through for one reason or another. We make it our business to try to avoid these problems in the first place, and that's one reason it's so important to get an experienced residential real estate attorney involved in selling or buying a home now, before you close and before problems arise. 

Some of the more common reasons breaches happen include:

• Inability on the part of the buyer to obtain financing

• The buyer changed their mind

• A home inspection reveals a structural problem that was unknown when the contract was entered into

• The appraisal came back for less than the purchase price
  

As a seller, your remedies are limited by the reason the sale is not taking place and the actual terms of the sales contract. Typically, you have three options.

1. Earnest Money. When the buyer made their initial offer to purchase the home, they put down “earnest money.” This money refers to a term in the contract that states you get to keep a certain amount in cases where the buyer backs out of the contract. Keeping this earnest money, canceling the contract, and moving forward with listing the home again might be your best option. 

2. Specific Performance. You may be able to sue for specific performance. If you are successful, the buyer would be forced to go through with their purchase pursuant to the terms of the contract.

3. Breach of Contract. Due to a buyer's failure to follow through with the home purchase, you may be able to sue them for breach of contract. Breaches of the contract can materialize in different ways, including:
   

   • Buyer fails to come to the transaction in good faithBuyer does not have adequate funds to make a contract deposit and the check bouncesBuyer does not tender the balance of the purchase priceBuyer purposely defaults,

   e.g.

   • , the buyer fails to provide a mortgage commitment letter or other bank documents as required Buyer fails to provide honest warranties and representations
     

The remedy best for you is something you should discuss with an experienced real estate attorney, and of course, we always recommend having an experienced residential real estate attorney involved in buying or selling your home as early as possible. Call us now for help.