Typical Causes Of Real Estate Contract Disputes

Real estate contract disputes can trigger nasty legal battles and cost you a lot of money. Understanding why these disputes arise can help you prevent them. Below are some common causes of real estate contract disputes.

Loan Fraud

Mortgage fraud arises if an applicant misrepresents or lies about information that affects mortgage determination. Mortgage fraud occurs in several ways, for example:

• A buyer loses their job during the purchase process but fails to inform the mortgage company or seller
• A buyer inflates their income and deflates their liabilities
• A buyer colludes with an appraiser to return a value higher than the property's market value

Such issues can lead to mortgage denial. In such a case, the seller might accuse the buyer of breach of contract by intentionally taking actions (fraud) that jeopardize the transaction.

Failure to Disclose

Real estate law requires property sellers to disclose material facts concerning the properties on sale. Material facts determine property prices. For example, some jurisdictions require sellers to disclose violent deaths in their properties, potential hazards, and hidden damages.

Buyers often back out of deals when they realize the seller failed to disclose some facts about their properties. In such a case, the buyer might dispute whether the undisclosed fact is material to the sale.

Payment Failure

A property purchase or sale contract specifies the purchase price and the payment terms. In many cases, the buyer must transfer the rest of the funds (in addition to the earlier earnest deposit) to the seller by closing day. A seller who doesn't receive their money in time can cancel the transaction and hold the buyer liable for a breach of contract.

Included Items

A real estate transaction should specify all the items included with the home during the sale. The buyer should know whether they will get the storage shed, movable appliances, or potted plants. Sometimes, however, buyers assume such items' inclusion only to have the sellers cart away the items on closing day. An aggrieved buyer might claim a breach of contract in such a case.

Boundary Disputes

Boundary disputes are common when parties to a transaction don't do due diligence. Consider a property owner who assumes their property boundary is 50 yards from their house, only for a neighbor to reduce the distance to 40 yards before closing. In such a case, the buyer might pull out of the deal for not getting the property they bargained for.

Hopefully, you won't experience contract disputes when buying and selling a home. Remember to engage real estate professionals, including a realtor and real estate lawyer, to preempt such disputes.