How to Avoid a Real Estate Purchase Contract Breach

How to Avoid a Real Estate Purchase Contract Breach

When parties enter into a real estate contract, both sides commit to following a process that will ultimately transfer property ownership. During the transaction, the seller’s responsibilities include disclosing material facts about the structure or land, making the property available for the buyer’s inspection, maintaining it during the pendency of the sale, appearing on the date scheduled for closing, and signing the required paperwork. The buyer must arrange to pay for the property and be ready to sign at closing. Although both the seller and buyer may begin the transaction with the same goal, complications can arise that may interfere with the sale. The good news is that by knowing how to avoid a real estate contract breach beforehand, you can help ensure the success of your transaction.

Buyer Financing Issues

Buying and selling real estate usually involves a buyer paying a seller a significant amount of money. If the buyer has to borrow money for the transaction, a lender will also be part of the process. By signing the purchase contract, the buyer promises to have the required funds or financing to complete the transaction at closing. If a buyer does not have funding to go through with the sale, be able to complete the transaction and may be in breach. Buyers can help prevent this breach by working with a lender before entering into the contract and obtaining pre-qualification. Additionally, after pre-qualifying, the buyer can continue to work with their lender and refrain from incurring debt that would impact their creditworthiness.

Carryback Financing

When a seller and buyer decide to use carryback financing, the seller acts as the mortgage lender. The seller continues to remain on the mortgage, and the buyer agrees to pay a certain percentage of the property?s purchase price. Often, this alternative to a traditional property loan provides buyers with imperfect credit access to homeownership they might not otherwise have. This type of loan also gives the seller more flexibility to transfer ownership of their property. Carryback Loan agreements tend to be short-term as their purpose is to provide the buyer time to make payments and improve their credit. The idea is when the carryback agreement term ends, the buyer will be in a better position to obtain traditional financing. As with any loan, there is always a risk that the borrower will default. If you decide the use carryback financing, it’s crucial that you work with an experienced real estate attorney to ensure that the necessary documents are properly drafted and that the agreement is structured in a manner that protects your interest.


Sometimes buyers make offers on property that are contingent upon the sale of their existing home. Without the sale, the buyer may not qualify for a loan. Further, even if the buyer is eligible, they may not be in a position to pay two deed of trust obligations at the same time. If a seller does not want to be faced with this uncertainty, they have the option of not accepting contingent offers. Sellers and buyers in this situation should use express language that protects both of their interests if the contingent sale does not take place. When the correct terminology is used, the buyer can leave the transaction without having breached the agreement, and the seller can be compensated for their incidental costs.

Sellers and buyers can also run into problems if they are not careful in how they set up a lease/option or “rent to own” transactions. These transactions involve both a lease and an option agreement, and the documents must be drafted in concert with one another. Your real estate attorney can prepare the lease and option documents in accordance with Arizona law and help ensure that the proper protections in place.

When you are considering entering into a transaction of this magnitude, it’s vital that you have the advice and insight of an experienced Arizona real estate attorney. Your counsel can explain your options and help you ensure that your interests are protected before, during, and after the sale is complete. Additionally, your attorney can assist you in avoiding a breach of your real estate contract.

Laura B. Bramnick is an experienced Arizona real estate attorney who can help you manage all aspects of your Arizona real estate matter. If you are seeking an exceptional, client-driven real estate lawyer in Phoenix and throughout the State of Arizona, contact Laura B. Bramnick to schedule your consultation.

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