When Real Estate Purchase Agreements Break Down

Intro

Real estate purchase agreements are designed to allocate risk, define timing, and bring certainty to high-value transactions. When a deal collapses, the consequences can extend well beyond the loss of the transaction itself—deposits are frozen, market conditions change, and leverage shifts quickly. Disputes frequently arise when one party seeks to exit the deal or reinterpret obligations after conditions evolve. Presidio Law Firm LLP represents buyers and sellers in real estate purchase agreement disputes where contractual rights, escrowed funds, and remedies are contested.

Why Purchase Agreement Disputes Occur

Most real estate disputes do not arise from blatant refusal to perform. They emerge from ambiguity, timing, or the exercise of discretion under pressure. Inspection findings, financing challenges, regulatory approvals, and disclosure issues can all trigger conflict—particularly when market conditions change and incentives shift.

Agreements that function smoothly in cooperative markets can become battlegrounds when values fluctuate or unexpected issues surface.

Contingencies: Protection or Pressure Point

Inspection, financing, appraisal, and approval contingencies are intended to manage uncertainty. In practice, they are frequent flashpoints. Disputes often center on whether a contingency was timely invoked, properly waived, or exercised in good faith.

Courts examine both the contract language and the conduct of the parties. A contingency cannot always be used as a pretext to escape an unfavorable deal. Conversely, rigid enforcement without regard to agreed discretion can expose a party to liability.

Good Faith and Fair Dealing in Performance

Every real estate purchase agreement carries an implied covenant of good faith and fair dealing. This covenant does not rewrite the contract, but it governs how contractual rights are exercised.

Disputes often hinge on whether a party acted opportunistically—delaying approvals, withholding cooperation, or manufacturing obstacles—to force renegotiation or termination. Courts scrutinize intent, timing, and consistency with prior conduct.

Disclosure and Misrepresentation Claims

Seller disclosures are a common source of litigation. Buyers may allege that material facts were concealed or misrepresented; sellers may argue that disclosures were accurate, complete, or that issues were discoverable through inspection.

These disputes often turn on knowledge and materiality. Timing matters: what the seller knew, when they knew it, and whether the information would have affected a reasonable buyer’s decision.

Escrow, Deposits, and Leverage

Earnest money deposits frequently become the central leverage point once a dispute arises. Whether a deposit is refundable depends on strict compliance with notice requirements, contingency timelines, and contractual conditions.

Escrow instructions can freeze funds indefinitely if parties disagree. Resolution may require mediation, arbitration, or litigation to determine entitlement.

Understanding escrow mechanics early can prevent unnecessary stalemates.

Market Shifts and Buyer’s or Seller’s Remorse

Changes in market conditions often catalyze disputes. Buyers may attempt to exit when values decline; sellers may resist performance when prices rise.

Market movement alone does not excuse nonperformance. Courts generally enforce bargains absent a contractual basis for termination. Attempts to reframe remorse as contractual failure are frequently contested.

Remedies: Damages vs. Enforcement

Available remedies depend on the contract and the nature of the breach. Buyers may seek return of deposits, damages, or—in appropriate cases—specific performance. Sellers may pursue retention of deposits as liquidated damages or seek damages for breach.

Liquidated damages provisions are common but must meet statutory requirements to be enforceable. Whether such provisions apply often becomes a contested issue.

Communications That Shape the Case

Emails, notices, and escrow instructions exchanged during a dispute often determine outcomes. Informal statements can be construed as waivers, admissions, or anticipatory breach.

Strategic communication matters. What is said—and when—can materially affect leverage and remedies.

Litigation vs. Resolution Strategy

Not every dispute requires litigation, but credible readiness to litigate often drives resolution. Early legal analysis allows parties to assess strengths, weaknesses, and exposure before positions harden.

In some cases, prompt enforcement preserves value; in others, negotiated exit minimizes loss. Strategy should align with the client’s long-term objectives, not just immediate frustration.

Why Timing Is Critical

Delay can be costly. Missed deadlines, lapsed contingencies, or premature termination can alter rights irreversibly. Once a deal collapses, reconstructing leverage is difficult.

Early evaluation can prevent avoidable errors and preserve remedies that quietly expire.

Closing

Real estate purchase agreements are binding contracts with significant financial consequences. When disputes arise, outcomes often turn on precise language, timing, and conduct under pressure. Presidio Law Firm LLP works with buyers and sellers to enforce agreements, defend claims, and resolve disputes in a manner that protects substantial real estate interests and long-term objectives.