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The primary consequence of breaking a real estate agreement to buy contract, is the potential to be sued for specific performance. While there are other pitfalls that can occur when a contract is broken, this is the one that is most often associated with a broken real estate contract.

Specific performance falls under the law of remedies. This is the court classification that attorneys use to file the claim. This simply means that when no other remedy presents itself, like getting the money someone should have paid in their contractual agreement to purchase your home, then you can sue them for specific performance. What usually happens in these cases where a contract is actually breached, is that the courts force the party who broke the contract to fulfill their contractual obligation.

Keep in mind, that specific performance is rarely used. It must be proven that the party that breached the contract did so with no prior reason and ill intent. One good example would be that a purchaser writes an offer on a property with all intent to purchase the property. After the contract is written, they find that they are unable to obtain financing. They would be forced to break the contractual agreement and could not be held accountable for the breach. Most contracts protect against this and allow potential buyers to not be sued for this reason.

However, sellers with a good real estate agent will avoid this particular problem altogether. No potential buyer should be allowed to view a property without getting a pre-approval letter from a bank. This eliminates the potential for seller's to waste their time and lose potential buyer's and have no recourse, like specific performance, later.

When breaking a real estate listing contract, there are potential consequences to the seller who is choosing to leave the contractual agreement. Most Brokers have very specific guidelines that will release a seller from a listing contract. Some of those are as follows:

1. The seller must reimburse the broker for advertising costs.

2. The seller must agree to not re-list with another broker for as long as six months in some circumstances.

3. The seller will not be allowed to sell their property to any potential buyers that have seen the property through the listing company.

Without signing this agreement, most Brokers will not release a seller from their listing agreement aside from gross negligence from an agent.

These are in place to protect the broker from corrupt seller's who use Real Estate companies to get buyers and then cut them out of their earned commission. As a South Carolina Real Estate Broker and owner of my own company, I can tell you, it does occasionally happen.

Real Estate contracts are tricky business. However, there are always loopholes. Always ask clear, concise questions before signing any real estate contract. They are State and Federal contracts and the government takes that pretty seriously.

Learn more about this author, Kristi Walker.
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