Most common causes of real estate litigation

Ferguson & Ferguson

Attorneys at Law

April 20th, 2021

Most common causes of real estate litigation

People shaking hands in front of the house.

People shaking hands.

Everyone who goes into the real estate market, regardless of whether they are buying or selling, wants things to go smoothly. Unfortunately, sometimes it just doesn’t work out that way. Real estate litigation has become commonplace, but that information shouldn’t necessarily scare you out of buying or selling your property. Most businesses will face a legal dispute at some point. Litigation is a tool used to pursue legal rights in cases of wrongdoings. We will cover the most common causes of real estate litigation and how they occur.

Real estate litigation

No matter where you land in the chain of people involved in a real estate sale, whether you are a buyer or seller, agent or broker, real estate developer, landlord or tenant – you could be caught up in real estate litigation. In case you need legal representation, feel free to contact Ferguson and Ferguson for advice on the matter.
Being caught in a legal dispute happens more often than most people think. For example, some people are in the market to find their perfect dream home. To them, we recommend getting a buyer’s agent who will represent their best interests. Others look to find a suitable investment property. Regardless of the investing that you want to focus on, you should hire an agent to represent you. Sometimes through no fault of your own, mistakes will happen, and you will be forced into litigation.

Here are the most common causes of real estate litigation:

Roof of a house with damaged tiles.

Issues with the roof are common property defects buyers need to know about.

1. Failure to disclose property defects or problems
Sellers are obligated to disclose information about non-evident defects they know about that can influence the property value. For litigation to occur, the seller needed to be aware of the defect before the sale. Buyers need to prove that the seller who was aware of the defect or problem withheld the knowledge. However, buyers still need to do their due diligence. For example, the most common property defects that can cause litigation are holes in the roof or leaks. Also, if there have been any improvements to the property, check if all of the permits were in order.
2. Breach of contract.
When buying any property, you will be signing a contract. Within that document, there will be many different terms and conditions of the sale. Failure to honor any of these terms by either party is a breach of contract. This is probably one of the most common causes of real estate litigation. To avoid it, you should review the agreement carefully and make sure you are familiar with all of the provisions. This doesn’t only apply to the sale of real estate. A breach of contract can occur with the moving company, and you can file a moving complaint. As you can see, you need to be on your toes even after the sale is completed.
3. Breach of duty or negligence.
Real estate agents and realtors are obliged by law to act in the best interests of their clients. This also includes confidentiality in regards to sensitive information about their clients. They also need to make their clients aware of any relevant information that can be beneficial to them. Failure to do any of the above could be negligent and represent a breach of duty. Agents that end up causing losses to their clients could be facing a civil lawsuit. The best way to avoid any of these problems is to hire a reputable agent to represent your interests.

Couple looking at house blueprint on the wall.

Practical and legal property lines need to match up or it could be one of the causes of real estate litigation.

4. Boundary disputes.
Sometimes the practical property line a certain party is using doesn’t match up with the legal property lines. Another issue could be that the property line of a particular real estate is not appropriately registered. Both of these situations could lead to boundary disputes, leading to litigation. You can research the legal boundaries of the property you are interested in before going forward with the purchase.
5. Specific performance matters.
A contract that both parties sign might require the performance of certain obligations. Failure to perform the necessary actions detailed in the agreement might be cause for litigation. In case one of the parties is unable or unwilling to fulfill their contractual obligations, attempt to negotiate the dispute. Negotiation could be a way to prevent litigation. Legal battles can be drawn out and costly. Therefore negotiation could be in the interest of both parties.

How to protect yourself

First, we need to point out the obvious: you should always avoid any acts of willful misconduct or negligence. However, any wrongdoing that has occurred might be the fault of the other party. This means that you could be the one who is initiating the litigation. If you do end up in a lengthy and expensive legal battle, having a paper trail can be a lifesaver.

People looking at numbers in contract to ensure there are no causes of real estate litigation.

Having detailed paperwork will help you if you end up facing litigation.

The best ways to protect yourself are:
• Document everything. It is always good to be able to prove that you did no wrong. To do so, we recommend documenting everything.
• Check to see if everything is signed correctly. Make sure all the paperwork is signed by both parties and keep it in a safe place.
• Make copies. You can also make copies of all the important documents and keep them separate from the originals.
• Make sure nothing is missing. Go over all of the documents to make sure that no key pieces are missing.
If all of the above is true, you will be able to present a strong case. Even if you end up facing litigation, you will go into it knowing you have your bases covered.

Now that we have covered the most common causes of real estate litigation, you can do your best to avoid them. Regardless if you are buying or selling property, it is advisable to hire an agent to represent your interests. Take things one step at a time and read anything before you sign it. Hiring competent legal representation is also a smart option regardless if you are bringing or defending a lawsuit. You could end up saving a lot of time and money.
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