Common Real Estate Contract Disputes and The Best Ways to Resolve Them

Real estate transactions can be exciting yet complex. A simple misunderstanding in a contract can lead to disputes, costing time and money. Clear contracts are the foundation of smooth real estate dealings. They protect all parties, ensuring obligations and expectations are understood. Without them, real estate contract disputes can arise, leading to delays or costly litigation.

At Cowan & Carter Law Firm, we are experienced in resolving real estate contract disputes. With decades of experience in civil litigation, we provide litigation services tailored to protect your rights. Our team of real estate litigation lawyers in Toronto has a deep understanding of Canadian property law, making us a trusted partner in navigating contract issues.

This blog explores common real estate contract disputes and how to resolve them. We’ll cover practical solutions and highlight when expert legal intervention is necessary.

Common Real Estate Contract Disputes

Real estate contracts should minimize conflicts, but real estate disputes often arise. Below are common issues that disrupt property transactions.

Breach of Contract

A breach occurs when one party fails to meet their obligations under the contract. This can create significant financial and legal consequences for all involved.

Examples include:

• Non-payment of the agreed purchase price.
• Delayed closing without a valid reason.
• Failure to provide agreed-upon repairs before transfer.

In such cases, legal remedies may include enforcing the contract, seeking a property damage claim, or terminating the agreement.

Read Also: Residential Real Estate Litigation

Misrepresentation or Fraud

Misrepresentation happens when false information influences a party’s decision. Real Estate fraud goes a step further, involving deliberate deception. Both can damage trust and derail transactions.

For example:

• A seller claims the property is free of defects when major issues exist.
• A listing overstates the square footage or property features.

Case in point: A buyer discovers that the “renovated roof” is, in fact, leaking after purchase. This can lead to costly repairs and potential litigation.

Canadian law allows affected parties to seek remedies such as compensation, contract cancellation, or legal action.

Failure to Disclose Defects

Sellers must disclose known defects that affect the property’s value or safety. Failing to do so often leads to disputes and buyer dissatisfaction.

Common examples include:

• Undisclosed structural damage.
• Hidden issues like mold, pests, or faulty wiring.
• Misstating property boundaries.

In Canada, sellers have a duty of honest disclosure. Buyers can claim damages or rescind the agreement if they discover non-disclosure post-purchase.

Boundary and Title Issues

Boundary and title disputes often arise when property lines or ownership are unclear. These disputes can halt transactions or create long-term conflicts.

Key examples include:

• Disagreement over where a property begins and ends.
• Claims of ownership due to errors in the title or deed.

Such issues affect property use and value. For instance, if a neighbor disputes your fence placement, you may lose usable land or face costly adjustments. Resolving these disputes often requires surveys, title reviews, or legal intervention.

Read Also: What is A Civil Litigation Lawyer

Financing and Mortgage Contingencies

Financing disputes arise and can derail a deal quickly. A buyer’s inability to secure a mortgage is a common problem. Sellers may also face complications when buyers back out due to unmet financing contract terms.

Consequences include:

• Buyers losing deposits if they fail to meet contingency deadlines.
• Sellers having to relist properties and restart the selling process.

These situations cause delays and financial strain. Including clear financing contingencies in contracts helps prevent disputes.

Contract Ambiguities

Ambiguities in contracts create confusion and disagreements. Vague terms or incomplete clauses lead to differing interpretations of responsibilities.

Examples of ambiguous terms:

• Unclear deadlines for closing or inspections.
• Confusion over included fixtures or appliances.

Precise language is essential to avoid disputes. Contracts should clearly state expectations, timelines, and obligations. Engaging a legal professional ensures your contract leaves no room for interpretation errors.

Preventative Measures to Avoid Residential or Commercial Real Estate Contract Disputes

Preventing disputes is easier and less costly than resolving them. By taking proactive steps, you can ensure smooth transactions and avoid unnecessary conflicts.

Thorough Contract Review

A thorough contract review helps identify potential issues before they arise. Real estate contracts are complex, and small errors can lead to significant problems.

Key tips:

• Consult with experienced legal professionals.
• Review all contractual terms, requirements, timelines, and contingencies in detail.
• Ensure the contract with property owners aligns with current Canadian property laws.

Legal guidance before signing a contract on these matters ensures your contract protects your interests and avoids costly misunderstandings.

Comprehensive Property Inspections

Detailed property inspections uncover hidden issues that could cause disputes later. These inspections provide buyers with a clear picture of the property’s condition.

Benefits of inspections:

• Identify structural damage or defects.
• Assess major systems like plumbing and electrical.
• Ensure property details match seller disclosures.

Inspections allow buyers to renegotiate terms or request repairs, reducing the chance of post-sale surprises.

Clear Communication Between Parties

Clear communication builds trust and prevents misinterpretation. Both buyers and sellers should openly discuss expectations, responsibilities, and concerns.

Best practices include:

• Confirming agreements in writing.
• Asking questions about unclear terms or conditions.
• Regular updates on transaction progress.

When everyone is on the same page, disputes are less likely to occur.

Utilizing Standardized Forms

Standardized contracts provide a reliable framework for real estate transactions. These forms reduce ambiguity and include essential clauses to protect both parties.

Advantages of standardized forms:

• Ensure compliance with real estate regulations.
• Include tested language that minimizes legal risks.
• Provide clear guidelines for resolving common issues.

Using industry-standard documents simplifies the process and reduces room for errors.

Strategies to Resolve Real Estate Contract Disputes

Disputes can arise despite careful planning. Resolving them effectively requires the right approach. 

Here are four key strategies to address real estate contract disputes.

Negotiation

Negotiation is often the first step in resolving disputes. It involves direct discussions between the parties to find a solution.

Key advantages:

• Allows parties to address concerns openly.
• Helps avoid legal fees and lengthy processes.
• Maintains business or personal relationships.

In many cases, a fair compromise can prevent further escalation.

Mediation

Mediation involves a neutral third party who helps facilitate an agreement. The mediator listens to both sides and guides the discussion toward resolution.

Why choose mediation:

• It is cost-effective and less formal than court.
• Discussions remain confidential, protecting privacy.
• Both parties retain control over the outcome.

Mediation works best when both sides are willing to cooperate and reach common ground.

Arbitration

Arbitration provides a binding decision through a neutral arbitrator. Unlike mediation, the arbitrator reviews evidence and makes a final ruling.

Benefits of arbitration:

• Faster resolution compared to court proceedings.
• Less expensive than full litigation.
• Decisions are enforceable, ensuring closure.

This approach is ideal for disputes requiring a definitive resolution without a trial.

Litigation

Litigation becomes necessary when other methods fail. It involves taking the dispute to court, where a judge or jury provides a legally binding decision.

The role of Cowan & Carter Law Firm:

• Expert legal advice for clients facing complex disputes.
• Tailored strategies to strengthen your case.
• A commitment to achieving the best possible outcome.

While real estate litigation can be time-consuming, it offers the most comprehensive resolution for serious disputes.

See Legal Counsel from Experiences Real Estate Lawyers in Toronto

Real estate contract disputes can disrupt transactions and cause financial stress. Common issues like breaches, misrepresentation, undisclosed defects, and boundary disputes highlight the need for clear and precise contracts. When conflicts arise, resolution methods like negotiation, mediation, arbitration, or litigation offer effective paths forward.

At Cowan & Carter Law Firm, we help you protect your interests. Through decisive litigation services, our experienced team is here to guide you through every step.

Contact our litigation firm in Toronto today for legal assistance. Call us or visit our website to schedule a consultation and secure your property rights with confidence.

DISCLAIMER: Please note this article is not legal advice. You should always consult a lawyer for legal advice regarding your particular situation. The article is not necessarily a complete and/or accurate explanation of the law – it is an article of a general nature.

Published on December 4, 2024