Your Real Estate Deal Fell Apart. Here Are Your Legal Options.

When a real estate deal goes wrong, the first thing to disappear is clarity. You’re left with a broken contract and a flood of questions: 

• What happens to the earnest money? 
• Are you able to force the sale? 
• Are you about to be drawn into a costly lawsuit? 

The answer to these questions lies within your purchase agreement and Utah’s real estate laws. 

Depending on who breached the contract and how, your legal options may include compelling the other party to follow through with the sale (a remedy called specific performance), seeking financial damages for your losses, or legally canceling the entire agreement. The path you choose depends entirely on the specifics of your situation.

If you have a question about a breached real estate contract, call Wade Litigation for a clear assessment of your case at 888-705-5059.

Key Takeaways for a Failed Real Estate Deal

1. Your contract dictates your options. The purchase agreement is the legal roadmap that specifies remedies for breach, so a thorough review is the first step.
2. There are multiple legal remedies available. Depending on the breach, you might sue to force the sale (specific performance), seek monetary damages for your losses, or cancel the contract entirely.
3. You must act quickly. Utah’s statute of limitations sets a deadline for filing a lawsuit, and delaying action weakens your case as evidence disappears and market conditions change.

Common Ways Real Estate Deals Unravel (And Your First Legal Checkpoints)

Here are the most common scenarios and the legal questions we immediately investigate:

The Buyer or Seller Gets Cold Feet and Backs Out

This is one of the most frequent reasons for a deal to collapse. One party simply has a change of heart and decides not to proceed.

• For the Buyer: Can the seller keep my earnest money? It depends. If you backed out for a reason not covered by a contingency in your contract (like getting a bad inspection report or failing to secure a loan within the allotted time), you will likely lose the deposit. The contract typically specifies that the earnest money serves as liquidated damages for the seller.
• For the Seller: Can I sue the buyer for backing out? Yes, you typically have the right to sue for damages. In some cases, you may keep the earnest money as “liquidated damages”—a pre-agreed amount intended to compensate for the breach without having to prove the exact financial harm.

Failure to Disclose Significant Property Defects

This occurs when the seller knew about a serious issue—like a history of flooding, a faulty roof, or black mold—and did not mention it in the property disclosures. California law requires sellers to be forthcoming about known material defects.

• Your Potential Remedy: You may rescind (cancel) the contract and have your earnest money returned. If you only discover the defect after the closing, you may have grounds to sue the seller for the cost of repairs and any decrease in the property’s value caused by the defect.

The Buyer’s Financing Fails

A common hurdle is the buyer’s inability to secure a mortgage on the terms specified in the contract. The timing of this failure is everything.

• The Key Question: Did this happen before or after the financing contingency deadline? If it happened before the deadline expired, the buyer usually walks away from the deal with their earnest money intact. If it happened after, the buyer is likely in breach, and the seller has a valid claim to the deposit.

Title and Ownership Issues

Sometimes, a title search uncovers an unexpected problem, such as a lien, an easement, or another claim on the property that “clouds” the title. This is precisely what title insurance is designed to protect against.

• Your Potential Remedy: The purchase contract usually gives the seller a set period to resolve the title issue. If they cannot provide a clear title within that timeframe, the buyer has the right to cancel the agreement and have their deposit returned.

Your Legal Toolbox: A Closer Look at Available Remedies

Once a breach of contract is clear, the question becomes: What do you actually recover?

Your goal dictates the remedy you pursue. Do you want this specific property above all else? Or are you focused on recovering the financial losses the broken deal has caused? These are the primary legal options when your real estate deal goes wrong.

Specific Performance: Forcing the Sale

This remedy is a court order compelling the breaching party to follow through with the terms of the contract. You are asking a judge to force the seller to sell you the house, or the buyer to buy it.

This remedy is common for buyers when a seller backs out of a deal for a unique property. Because every piece of real estate is considered legally unique, monetary damages sometimes are not enough to make the buyer whole. A court may grant specific performance and force the transaction to close as originally agreed.

Monetary Damages: Compensating for Your Losses

This is a financial award intended to put you back in the position you were in before the breach of contract occurred. It is the most common remedy sought in these disputes.

Damages are calculated based on your actual, provable losses. This may include:

• The lost value if the property’s price increased since you signed (for buyers).
• The cost of temporary housing and storage.
• Inspection and appraisal fees you paid.
• Additional mortgage-related fees or different interest rates.
• Other direct expenses incurred because of the breach.

Rescission and Restitution: Undoing the Deal

This remedy effectively cancels the contract, as if it never happened. Both parties are returned to their original positions (a concept known as “restitution”).

The buyer gets their earnest money back, and the seller keeps the property. This is a common and appropriate remedy for issues like fraud or significant misrepresentation, such as when a seller intentionally hides major structural defects that would have stopped the buyer from purchasing the home.

What Happens After You Win: Enforcing a Real Estate Judgment in California

Winning the case is step one. Getting the other party to comply, or collecting what the court awarded you, is step two.

In California real estate disputes, especially those involving specific performance or monetary damages, enforcement can be a separate legal challenge. 

What If the Seller Refuses to Complete the Sale After a Specific Performance Order?

In cases where the court grants specific performance, the judgment is a court order compelling the breaching party to fulfill the contract—usually, to transfer the property under the original terms. But what if the seller refuses to cooperate?

Here’s what happens next:

• Motion to Enforce Judgment: Your attorney can file a motion asking the court to enforce the judgment. The judge may issue additional orders to compel the seller to act.
• Appointment of an Elisor: If the seller still refuses to sign the deed, California courts have the power to appoint a court officer called an elisor (often the court clerk or sheriff) to sign on the seller’s behalf. This is authorized under California Code of Civil Procedure § 128(a)(4), which gives courts broad power to carry out their judgments.
• Lis Pendens Filing: In most cases, your real estate attorney will have already recorded a lis pendens (Latin for “suit pending”) when the lawsuit was filed. This cloud on the title prevents the seller from selling or refinancing the property to another party while the case is pending.

What If You’re Awarded Damages but the Other Party Doesn’t Pay?

A judgment for monetary damages doesn’t result in automatic payment. If the breaching party doesn’t voluntarily pay what the court ordered, several enforcement tools are available under California law.

1. Judgment Liens Against Real Property

You can record an Abstract of Judgment with the county recorder in any California county where the debtor owns real estate. This creates a judgment lien on any property they own or acquire in that county.

• If they attempt to sell or refinance the property, they will be required to satisfy the lien first.
• The lien lasts for 10 years and can be renewed.

2. Bank Levies and Wage Garnishments

Through a Writ of Execution, your attorney can direct the sheriff to:

• Levy the breaching party’s bank account
• Garnish their wages
• Seize and sell certain non-exempt personal assets

These are powerful tools but must be handled with precision to comply with California debtor protection laws.

3. Charging Orders (for Business Interests)

If the breaching party owns an interest in an LLC or partnership, you can seek a charging order under California Corporations Code § 17705.03, allowing you to intercept any distributions they receive from that business.

4. Post-Judgment Interest

Under California Code of Civil Procedure § 685.010, monetary judgments accrue interest at a rate of 10% per year. This can significantly increase the total amount the breaching party owes the longer they delay payment.

What If the Defendant Tries to Transfer or Hide Assets?

If you believe the breaching party is attempting to transfer property or hide assets to avoid enforcement, you can seek the following remedies:

• Fraudulent Transfer Action: Under California’s Uniform Voidable Transactions Act (UVTA), you can sue to reverse a transfer made to defraud creditors.
• Prejudgment Writs: In certain situations, you may ask the court for a prejudgment attachment or restraining order to prevent the other party from dissipating assets before the case concludes.

Why Enforcement Strategy Matters from Day One

A judgment you can’t enforce has little value. That’s why we consider enforceability from the very beginning of your case.

At Wade Litigation, we assess the opposing party’s assets, equity in the property, and potential ability to pay as part of our strategy. In cases where specific performance is the goal, we take early steps, like filing a lis pendens, to preserve your ability to enforce the judgment later. For monetary damages, we track assets and prepare for fast enforcement after trial or settlement.

Why You Shouldn’t Wait to Address a Failed Real Estate Deal

After a deal collapses, it’s tempting to wait and see what happens. You might hope the other party will come to their senses or that the problem will somehow resolve itself. This inaction, however, is costly.

California has a statute of limitations that sets a firm deadline for filing a lawsuit. For written contracts, this is four years (Cal. Code Civ. Proc. § 337). While that may sound like a long time, evidence disappears, communications get deleted, and market conditions change, all of which weaken your position. Furthermore, real estate markets shift rapidly. The financial damage you suffer today may be very different in six months, making it harder to prove your losses in court.

Taking prompt action allows us to preserve evidence, send formal notice to the other party, which sometimes prompts a quick settlement, and file a lawsuit before any legal deadlines expire. It puts you in an offensive position, not a defensive one.

Frequently Asked Questions About Real Estate Disputes

Can I get my earnest money back if I cancel the deal?

It depends entirely on why you canceled. If you backed out for a reason allowed by a contingency in your contract (e.g., a bad inspection report or inability to get financing by the deadline), you are entitled to its return. If you canceled for a reason not covered by a contingency, the seller may keep it as damages.

Does it matter if the contract was verbal?

In California, as in almost every other state, contracts for the sale of real estate must be in writing to be enforceable. This legal principle is known as the Statute of Frauds. A verbal agreement to buy or sell a house is not binding in court. California law specifically requires that contracts for the sale of real property be in writing and signed by the party to be charged.

How long does a real estate lawsuit take?

It varies greatly depending on the difficulty of the case and the willingness of the parties to negotiate. A straightforward dispute that settles early through mediation might resolve in a few months. A more complicated case involving significant damages or that goes to trial could take over a year.

Don’t Let a Broken Contract Dictate Your Next Move

A signed contract is not the end of the story; it is the beginning of your legal options. The breach of an agreement by another party does not mean you have to absorb the loss without a fight.

With the right strategy, you can hold the other party accountable to the agreement they signed. 

Let us help you understand the strength of your position and build that strategy. For a clear evaluation of your case, call Wade Litigation at 888-705-5059.