How Do You Deal with Issues That Arise After a Real Estate Closing?

Once you close a real estate deal, you expect to be able to move on to the next one. You expect things to go according to plan, and you expect that the effort you put into getting to closing will be enough to protect you going forward.

But what if things don’t go according to plan?

Even with thorough due diligence on both sides, when closing real estate transactions, there can still be a variety of unknowns. When these unknowns lead to issues, working closely with an experienced Miami real estate attorney can be essential for achieving a favorable resolution as efficiently as possible.

5 Key Considerations When Dealing with a Post-Closing Dispute

If you are dealing with unanticipated issues after a real estate closing, what do you need to know? Here are five key considerations:

What Does the Contract Say?

Any time you are dealing with a dispute arising out of a real estate transaction, the first step is to look at the contract. What does it say (if anything) about the situation at hand? In many cases, a well-drafted and thoroughly negotiated contract will address post-closing contingencies directly. But, even the best contracts cannot anticipate all potential issues. If your contract doesn’t address the issue directly, the question then becomes: Does it address the issue indirectly, or does it not address the issue at all?

If your contract directly (or even indirectly) addresses the issue at hand, then working with your Miami real estate attorney to ensure that the other party understands its contractual obligations could facilitate an efficient resolution that avoids the need for alternative dispute resolution (ADR) or litigation. Oftentimes, parties lose sight of the terms to which they have agreed, and reminding them of their obligations can be enough to resolve issues before they start getting out of hand.

Does the Contract Require Alternative Dispute Resolution (ADR)?

If it is not possible to resolve a post-closing dispute informally, then you will need to evaluate your next steps. Here, you will want to review your contract (or have your attorney review your contract) to determine if it requires ADR. Many real estate contracts require mediation or arbitration (or both) before (or instead of) initiating litigation in court.

Importantly, even when real estate contracts include mandatory ADR clauses, they will often include exceptions as well. For example, it is fairly common for parties to be able to go to court to seek injunctive relief when a breach presents a risk for immediate and irreparable harm. You will want to take a look at the contract’s jurisdiction, venue and choice of law clauses as well—as these will also play central roles in determining what makes sense in terms of your next move.

Does the Contract Provide for Specific Remedies?

Real estate contracts may also provide for specific remedies in certain circumstances. For example, if a seller fails to turn over exclusive possession of the property, the contract may include a “specific performance” provision that requires the seller to remove its property and otherwise vacate the premises. Or, if a buyer fails to make payments under a seller financing arrangement, the buyer’s default may trigger a “liquidated damages” provision that requires immediate payment of a predetermined amount that compensates the seller for its financial losses.

In many cases, contracts will not only provide for specific remedies, but they will provide that these are the parties’ exclusive remedies as well. As a result, if your contract includes a specific remedy provision, it will be important to review this provision carefully with your attorney to ensure that you have a clear understanding of its implications.

What is the Likely Outcome of ADR or Litigation?

When evaluating your options in relation to a post-closing dispute, it is also important to assess the likely outcome of ADR or litigation. If the facts and law are on your side, this should give you significant leverage to pursue favorable settlement negotiations. Conversely, if the facts and law are not on your side, you will need to factor this into your decision-making—and you may need to consider settlement as your least expensive option.

Of course, parties to real estate deals won’t always (or often) agree on the likely outcome of a dispute—at least not right away. As a result, in many cases, it will be necessary to initiate ADR or litigation and then leverage the evidence uncovered through discovery to pursue a favorable pre-hearing or pre-trial settlement. Pre-trial motions practice can also help to narrow down the issues at play—and in some cases, it can lead to a favorable judgment for one party or the other.

Is It In Both Parties’ Best Interests to Find a Resolution?

Finally, another key consideration when seeking to settle a post-closing dispute is whether it is in both parties’ best interests to find an amicable resolution. Oftentimes, avoiding litigation will be beneficial for both parties—not only to avoid the time and costs involved in going to trial, but also to avoid having the litigation come up during due diligence in subsequent transactions.

In most cases, parties will share at least some common ground in post-closing disputes. Whether this is enough to spur good-faith settlement negotiations will depend on the circumstances involved. But, if both parties are willing to settle, then moving on will be a matter of finding a middle ground—which may be closer to one side or the other—that is reasonably satisfactory for all parties involved.

Schedule a Free Consultation with a Miami Real Estate Attorney

If you are dealing with issues after a real estate closing in Florida and would like to know more about the options you have available, we encourage you to schedule a free consultation at Edelboim Lieberman. To speak with a Miami real estate attorney in confidence as soon as possible, please call 305-768-9909 or tell us how we can get in touch online today.