Source: http://kinseylaw.com/clientserv2/civillitigationserv/realestate/breachrecontract/breachrecontract.html?FILE=bars/abafoc/abafoc000001&TITLE=Subject&TOPIC=Property%20&%20Real%20Estate_Construction_1
Timestamp: 2019-04-19 03:17:47+00:00

Document:
Real estate contract litigation involves not only the general law of contract, but also particular statutory and common law rules. Whether the contract is a purchase and sale agreement, an installment land contract, an option to purchase, a lease, or some other type of instrument, it is subject to the same principles of law that govern contracts in general.
Consequently, the general law of contracts should be considered in any dispute concerning a real estate agreement and could have a decisive impact on the rights and obligations of the parties. For example, requirements for contract formation and enforceability, rules applicable to contract interpretation, and other general contract issues are important in litigation involving real estate agreements.
Other commonly litigated issues in real estate contract disputes include applicability of the statute of frauds, acts constituting breach, questions concerning title to real property, and the availability of particular remedies.
(3). an agreement by a purchaser of real property to pay a debt secured by a mortgage or deed of trust, unless assumption of the debt by the purchaser is specifically provided for in the conveyance of real property. [Civ. Code §1624(a)(1)].
Despite the broad language of Civ. Code §1624that contracts coming under the statute of frauds are "invalid," courts often find that the statute of frauds relates to remedies only and not to the substantial validity of the contract. Thus, noncompliance with the statute does not render the contract void, but only unenforceable. Oral agreements are valid and effective until their invalidity is asserted as a defense to enforcement. Failure to timely assert the defense waives the statute.
Justifiable Reliance: Where the owner of real property has changed his or her position in reliance on an oral purchase offer, the buyer may be estopped from avoiding the contract on the basis of the statute of frauds.
Executed Oral Agreements: In addition, executed oral agreements are exempt from the statute. Where a bilateral oral contract has been fully executed by one party, the remaining promise is outside the statute of frauds and the party who has performed may enforce the agreement against the other party.
Partial Performance: Although an estate or interest in real property, other than a lease for a term of 1 year or less, can be created only by a signed writing [Code Civ. Proc. §1971], this does not abridge the power of any court to compel the specific performance of an agreement in case of partial performance of the agreement [Code Civ. Proc. §1972]. Partial performance in this context generally means that the purchaser or lessee has taken actual, open, and notorious possession of the property.
Fraud: If the fraud of one of the contracting parties prevents a contract within the statute of frauds from being reduced to writing, the contract may be enforceable against the fraudulent party. Any other party who is led by the fraud to believe that the contract is in writing and acts on that belief to his or her prejudice may enforce the contract against the fraudulent party. [Civ. Code §1623] Further, even where an oral agreement is unenforceable as a contract, the misled party may bring a separate action for fraud.
"Marketable title" is title that a reasonable, well-informed purchaser exercising ordinary business judgment and prudence would be willing to accept.
Warranties: A warranty in a real property purchase and sale agreement is an express or implied representation by the seller as to some qualitative aspect of the property. A warranty serves to compel the seller to disclose material facts regarding the property and to give the buyer particular assurances regarding the status of the property. Warranties may consist of affirmative representations that a seller is not otherwise obligated to make. A seller’s obligation on a warranty is absolute; liability is imposed on breach regardless of whether the seller knew or should have known that the representation made was false.
Good Faith & Fair Dealing: Every contract contains an implied covenant of good faith and fair dealing by which each party promises not to do anything that might injure the right of the other party to receive the benefits of the agreement. The covenant requires a party to do everything the contract presupposes he or she will do to accomplish its purpose.
Seller's General Duty To Disclose: Sellers of residential real property have a duty to disclose any facts materially affecting the value or desirability of the property that are known or accessible only to the seller and not known to or within reach of the diligent attention and observation of the buyer. However, the seller is not liable for latent defects in property which he or she did not know about and had no reason to believe existed.
lawsuits against the seller threatening to affect or affecting the property.
Under Civ. Code §1102.13, any person who willfully or negligently violates the disclosure requirements is liable in the amount of the actual damage suffered by the purchaser.
An "as is" clause in a purchase and sale agreement does not insulate the seller from the common law duty to disclose defects or the requirements of Civ. Code §§1102 et seq. "As is" language serves to give notice of patent defects and means that the buyer accepts the property in the condition in which it is reasonably observable by him or her. If augmented by language indicating that the buyer is relying on his or her own inspection of the property, it may also relieve the seller of the duty to inspect for defects or to disclose matters that the seller should know but does not. However, the benefits of Civ. Code §§1102 et seq. are not waived merely by the buyer’s acceptance of "as is" language in the purchase agreement, and the seller remains liable for any failure, whether negligent or intentional, to reveal known concealed defects not apparent from an inspection of the property.
The wrongful failure to perform a contract or a material promise in a contract, where the nonperformance is not excused or justified, is a breach. The failure to perform any contract obligation subjects the defaulting party to liability for damages, regardless of the extent of the breach and whether or not it also excuses performance of the nonbreaching party. [See Civ. Code §3300].
the extent of uncertainty that the party failing to perform will perform the remainder of the contract.
contract is void because the object is either impossible [Civ. Code §§1597–1598], unlawful [Civ. Code §1598], or "so vaguely expressed as to be wholly unascertainable" or uncertain [Civ. Code §1598].
Contract Damages Recoverable By A Buyer: A buyer’s right to recover damages against a seller for breach of a purchase and sale agreement is measured either by Civ. Code §3300 or Civ. Code §3306. Where the breach arises from a covenant or warranty in the sale agreement, the general contract measure of damages applies and the buyer is entitled to the amount that will compensate him or her for all detriment proximately caused by the breach or likely to result from it.
Damages for breach of contract are confined to those that are foreseeable or could reasonably have been contemplated as a result of the breach.
Contract Damages Recoverable By A Seller. The seller’s damage remedy on a buyer’s failure to tender the purchase price under a sale agreement is the excess, if any, of the contract price over the property’s value at the time of the breach, together with consequential damages according to proof and interest. [Civ. Code §3307] If the property is resold for a price exceeding the contract price together with any consequential damages, the seller has no damages and may not recover from the defaulting buyer, regardless of the willfulness of the breach.
Consequential damages are any additional expenses that naturally flow from the breach and are necessary to assure the seller the benefit of his or her bargain. For example, the seller may recover expenses incurred in remarketing the property to be sold, including a broker’s commission. If the seller chooses not to use a broker for the resale, he or she may still be entitled to recover the amount of such a fee. The seller may even recover a hypothetical broker’s commission at the market price where the property is not resold at all.
Punitive Damages: In an action for breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that a person has been guilty of oppression, fraud, or malice, the plaintiff, in addition to recovering actual damages, may also recover punitive or exemplary damages. [Civ. Code §3294(a)] The plaintiff must establish the basis for recovery of punitive damages by clear and convincing evidence. [Civ. Code §3294(a)] Thus, punitive damages are generally not recoverable for breach of contract, no matter how willful or malicious, except where the wrongful act is also a tort such as actual fraud [Civ. Code §1572] or deceit [Civ. Code §§1709, 1710].
As used in Civ. Code §3294, fraud is an intentional misrepresentation, deceit, or the concealment of a material fact known to the defendant with the intention of depriving a person of property or legal rights or otherwise causing injury.
Liquidated Damages: The parties may agree in advance as to the amount of damages which will be paid in the event of a breach of agreement to buy or sell real property. Such damages are called "Liquidated Damages." The enforceability of liquidated damages provisions after a buyer’s default on a real property purchase and sale agreement is governed by Civ. Code §§1675–1681.
Attorney Fees: The rules for recovery of fees by the prevailing party in contract actions are set forth in Civ. Code §1717. If a contract provides that attorney fees and costs incurred to enforce the contract must be awarded to one of the parties or to the prevailing party, then the party that is determined by the court or arbitrator to be the prevailing party on the contract must be awarded reasonable attorney fees in addition to other costs. The prevailing party is the party recovering the greater relief in the action. [Civ. Code §1717] A party who prevails on a contract cause of action may be entitled to attorney fees under a contractual attorney fee provision even though the opposing party prevailed on other causes of action.
Rescission And Restitution: A real property contract, like other types of contracts, may be rescinded under specific circumstances. [See Civ. Code §1689] Rescission extinguishes the contract, terminates further liability on the agreement, and restores the parties to their former positions. This generally requires each party to return any consideration received prior to the rescission.
When a contract has been rescinded in whole or in part, any party to the contract may seek relief based on that rescission by: (1) bringing an action to recover any money or thing owing to him or her by any other party to the contract as a consequence of the rescission or for any other relief to which he or she may be entitled under the circumstances; or (2) asserting rescission as a defense or cross-complaint.
Reformation: Reformation is an equitable remedy that can be used to correct a real estate purchase and sale agreement or other instrument, such as a deed, mortgage, or lease, in order to state the true agreement of the parties. The remedy presumes the existence and validity of the contract and serves as a vehicle to correct the terms to reflect the actual intent of the parties at the time the contract was made.
Specific Performance: "Specific performance" relief is given by compelling a party to do that which ought to be done. [Civ. Code §3367(2)] In the case of a real property transaction they buyer may file an action for specific performance to compel a seller to convey the real property which is the subject of the transaction and the seller may file an action to require the buyer to purchase the property.

References: §1624
 §1624
 §1971
 §1972
 §1623
 §1102
 §3300
 §1598
 §1598
 §3300
 §3306
 §3307
 §3294
 §3294
 §1572
 §3294
 §1717
 §1717
 §1689
 §3367