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How to Settle Purchase and Sale Disputes: An Interview with Mark Santagata of Cacace, Tusch & Santagata

By Mark Santagata

Tell us a little bit about your company and the services you offer.

Cacace, Tusch & Santagata is a 10 attorney general practice firm located in Stamford. Depending on the matter, we practice throughout the state of Connecticut. Our practice includes all aspects of commercial and residential real estate, employment law, civil litigation and personal injury matters, family law and divorce, criminal law, valuation law and municipal tax appeals, zoning and land use issues, wills and estate planning, and appellate practice.

We celebrated our 30th successful year of practice in 2012. Our attorneys are committed to their clients and their communities. We are all active in political and nonprofit organizations, and have been recognized by the Connecticut Bar Association for our pro bono work. We carry the highest peer-review rating and are listed in Super Lawyers, Best Lawyers in America, U.S. News and World Reports' Best Lawyers, and the Bar Register of Preeminent Lawyers.

What are the most common purchase and sale disputes that you've handled for people in the Connecticut area?

The most common source of disputes in residential transactions is the condition of the property. In the environment that has existed over the past several years, where buyers have more leverage in the transaction than sellers, buyers commonly and understandably seek to exploit defects found in their inspection reports. Buyers demand concessions from sellers in the form of repairs or reductions in price. Sometimes the defects giving rise to disputes are minor, but in a buyer's market every possible opportunity is often taken to win concessions from the seller. This can complicate and occasionally derail transactions over relatively trivial issues.

On the other side of the transaction buyers can sometimes discover hidden defects in a property once they take possession after closing. Unexpected title issues, like easements or encroachments can also cause a buyer to seek compensation from a seller after the closing.

Can you explain what a breach of contract in a home purchase/sale is?

In any contract a breach occurs when one party fails to satisfy his or her obligations under the terms of the agreement. In the context of a real estate sale, the seller may not deliver the property to the purchaser, or may not deliver the property in the condition required by the contract. Alternatively, a buyer can breach by failing to have the money available to close the transaction at the time required by the contract.

What are the basic legal steps involved in these types of disputes?

Usually if a breach occurs the attorneys involved in the transaction will attempt to negotiate a resolution before the dispute escalates to litigation. With most real estate contracts the seller's attorney acts as an escrow agent holding deposit money paid by the buyer. If a dispute arises while the seller's attorney is holding escrowed funds, the seller's attorney is in a difficult situation that often requires the attorney to be sidelined while the dispute is resolved. A seller's attorney holding escrowed money can initiate a court action to seek judicial guidance on the disposition of the deposit, but the attorney can no longer represent the seller while he or she is holding the escrowed money. As a result, the seller usually has to find a new attorney if the dispute needs to be litigated.

Is there anything a buyer or seller can do prior to the purchase and sale agreement to help avoid a dispute?

Buyers should be careful about their financial limitations before signing any contract. Do not create an obligation to purchase property that you cannot afford. Do not let anyone oversell you on a property or a mortgage. Prequalifying for a mortgage will help a buyer better understand the limits of their financial circumstances before entering into a contract. Sellers should be as direct and honest as possible about the condition of the property being sold. Connecticut law requires that a seller provide a buyer with a form that describes the condition of the property. This form is attached to the sales contract.

Most buyers will pay to have an expert conduct an inspection of the property. If you have a skilled inspector they will likely detect problems that the seller did not disclose. Finally, if both parties are genuinely interested in completing the transaction, be reasonable. The seller should anticipate that the buyer will be able to identify problems with the property, and should behave accordingly. The buyer should anticipate that outside of architectural magazines there is no such thing as a flawless property. Imposing impossible and unrealistic expectations on the seller will only lead to disputes and a failed contract.

What advice would you give to homeowners who discover the seller intentionally misrepresented a major defect in their new house?

That is a complicated question without an easy answer. It depends on whether the buyer learns of the defect before or after the closing. If the closing has not yet occurred and there is specific language in the contract that constitutes a misrepresentation by the seller, there may be room for further negotiations and resolution of the problem by adjustment of the purchase price. However, if the buyer is relying on a verbal representation of the seller that is not incorporated in the contract or in the property condition disclosure form required by Connecticut law, renegotiation of the contract terms may not be possible.

If the misrepresentation is discovered after the closing the buyer must make a business decision regarding the financial impact of the misrepresentation and the cost and likely success of seeking satisfaction from the seller in court. Post-closing the buyer must contend with issues like the expense of litigation, whether the statute of limitations has expired, what type of claims might be available against the seller, and whether the seller has assets that will allow the buyer to collect on a judgment if the buyer is successful.

What's the best way for people to get in contact with you and your company?

Cacace, Tusch & Santagata is located at 777 Summer Street in Stamford. Anyone with an issue involving commercial or residential real estate can call us at 203-327-2000.

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