(18) Land Sale Contract Remedies

What is the general approach to remedies for specific types of contracts?

Determine whether damages, specific performance, rescission, restitution, or reformation applies after a valid contract has been breached.

What remedies are generally available when a vendor breaches a land sale contract?

General damages, rescission, restitution, reformation, and specific performance.

What measure of general damages applies when the vendor breaches a land sale contract?

The benefit-of-the-bargain measure.

How are a vendee's general damages calculated when the vendor breaches a land sale contract?

The difference between the contract price and the fair market value of the land on the date of the breach.

When does a vendee recover general damages for a vendor's breach?

When the fair market value of the land exceeds the contract price at the time of the breach.

Example: A vendor agrees to sell land for $100,000 but breaches when the land is worth $125,000. What are the vendee's general damages?

$25,000.

What is the minority rule when a vendor breaches in good faith because of a title problem?

The vendee is limited to out-of-pocket expenses plus restitution.

Besides general damages, what equitable remedies may a vendee seek when the vendor breaches?

Rescission, restitution, reformation, and specific performance.

What damages are available under the minority rule when the vendor commits a good-faith title breach?

Payments made plus reliance expenses incurred because of the vendor's representations.

What restitution remedy is available when a vendor commits a good-faith title breach?

The vendee may recover payments previously made to the vendor.

When will specific performance generally be granted after a good-faith title breach?

Only if the title defect can be corrected.

What is an acreage deficiency?

The property contains fewer acres than the contract specifies.

When does an acreage-deficiency issue arise?

When the contract states the price on a per-acre basis rather than selling the property in gross.

When may rescission and restitution be granted for an acreage deficiency?

When the deficiency resulted from fraud or mistake.

How does specific performance apply when there is an acreage deficiency?

The court grants specific performance with an abatement of the purchase price.

What is an abatement of the purchase price?

A reduction in the purchase price to compensate for the acreage deficiency.

What damages are available when the vendor delays performance of a land sale contract?

The rental value of the property during the period of delay.

Besides delay damages, what additional remedy is available when the vendor delays performance?

Restitution.

What remedies are generally available when the vendee breaches a land sale contract?

General damages, rescission, restitution, and specific performance.

How are a vendor's general damages calculated when the vendee breaches?

The difference between the contract price and the fair market value of the land on the date of the breach.

When does a vendor recover general damages after the vendee breaches?

When the fair market value of the land is less than the contract price.

Example: A buyer agrees to purchase land for $100,000 but breaches when the land is worth $75,000. What are the vendor's general damages?

$25,000.

Why may a vendor obtain specific performance when the vendee breaches?

Because damages do not adequately protect the vendor's interest in receiving the purchase price.

Why are damages considered inadequate for the vendor after the vendee breaches?

Because the vendor's expectancy is the purchase price itself.

What remedies are available to the vendor when an acreage deficiency exists?

Rescission, restitution, or specific performance with an abatement in the purchase price.

How does specific performance operate when the vendee breaches and there is an acreage deficiency?

The sale is completed, but the purchase price is reduced to reflect the deficiency.

Testable Issue: How are a vendee's general damages measured when the vendor breaches a land sale contract?

By the difference between the contract price and the fair market value at the time of the breach.

Testable Issue: How are a vendor's general damages measured when the vendee breaches a land sale contract?

By the difference between the contract price and the fair market value at the time of the breach when the property's value has fallen below the contract price.

Testable Issue: When is specific performance generally available in a land sale contract?

It is generally available to either party because land is unique and damages are usually inadequate.

Testable Issue: How is an acreage deficiency remedied?

By rescission and restitution if fraud or mistake exists, or by specific performance with an abatement of the purchase price.

Essay Rule: How should you analyze remedies for a breached land sale contract?

Identify whether the vendor or vendee breached, calculate benefit-of-the-bargain damages using the market value at the date of breach, consider equitable remedies such as rescission, restitution, reformation, and specific performance, and analyze any special issues involving title defects, acreage deficiencies, or delay in performance.

Master Synthesis: What remedies are generally available for breach of a land sale contract?

Benefit-of-the-bargain damages remain the primary legal remedy, while rescission, restitution, reformation, and especially specific performance are frequently available because land is considered unique.