Real estate transactions can be complex, and even the smallest error can lead to costly legal disputes.
Whether you’re buying, selling, or managing property, it’s important to understand the potential pitfalls that could lead to litigation.
By recognizing these risks early, you can take proactive steps to avoid common legal issues in real estate.
| Category | Percentage/Statistic | Details |
|---|---|---|
| Contract disputes | 60% | The majority of real estate litigation involves breaches of contract. |
| Boundary disputes | 25% | A significant portion of litigation deals with unclear property boundaries. |
| Zoning disputes | 15% | Zoning issues often arise when developing or altering properties. |
| Litigation costs | $5,000 to $50,000 | Depending on case complexity, legal fees can be costly. |
| Homebuyer legal complaints | 10% | Mainly due to undisclosed defects discovered post-purchase. |
| Tenant-landlord conflicts | 20% (in commercial cases) | Disputes often arise over lease agreements and obligations. |
| Settlements before trial | 70% | Most real estate litigation cases are resolved outside of court. |
| Statute of limitations | 5-10 years | Varies by state for filing real estate disputes. |
Real estate disputes can occur for many reasons.
For example, contract breaches are common—when one party doesn’t uphold their end of a deal, things can get heated quickly.
Another frequent cause is disagreement over property lines, especially in densely populated areas.
Even seemingly minor misunderstandings, like a zoning issue or failure to disclose a known property defect, can spark a lawsuit.
Protecting your investment is critical because litigation can reduce your property’s value and lead to unexpected costs.
For instance, a lawsuit over a boundary dispute could require paying surveyors, lawyers, and potentially thousands of dollars in court fees.
Preventing litigation through careful planning—such as hiring a real estate attorney to review contracts—saves you from financial headaches.
You can’t afford to ignore even small details in real estate transactions because they often lead to big problems later.
The legal outcomes of real estate disputes can vary widely.
In some cases, settlements may be reached out of court, while in others, a judge may order a property owner to pay damages or even alter their use of the property.
Legal fees can range from $2,000 to $50,000 depending on the complexity of the case, and a drawn-out lawsuit could take years to resolve.
Losing a case could mean paying the opposing party’s legal fees as well—doubling your losses.
Litigation could also lead to restrictions on your property, limiting how you can use or develop it.
A breach of contract occurs when one party does not fulfill the terms agreed upon in a contract.
For example, if a seller fails to transfer the property title after receiving full payment, that would be a breach.
On the other hand, if a buyer does not provide the necessary funds by the agreed deadline, they would be at fault.
In real estate, breaches often occur during the final stages of transactions—when closing dates are missed, or vital documents are not provided.
Most real estate contract disputes happen because one party misunderstands their obligations.
For instance, a buyer might assume the seller will make repairs to a home before closing, but if that condition isn’t explicitly written in the contract, it could lead to disagreements.
Financing issues also commonly trigger disputes—especially when buyers are unable to secure loans, causing delays or termination of the deal.
Real estate contracts are full of fine details, and missing just one can lead to costly litigation.
A comprehensive real estate agreement is essential to ensure a smooth transaction and to prevent disputes between buyers and sellers.
A clear, well-written contract outlines the terms of the deal and the responsibilities of each party.
By following these steps, both buyers and sellers can protect their interests and ensure that their real estate transaction proceeds smoothly without legal complications.
Property boundary disputes are another common source of real estate litigation. These disputes typically arise when there is uncertainty or disagreement over where one property ends and another begins.
Such conflicts can escalate quickly, especially if they affect property value, land use, or development plans.
Understanding how to prevent and resolve boundary disputes is crucial for maintaining good neighbor relationships and protecting your property rights.
Boundary disputes usually stem from unclear property descriptions in legal documents, such as deeds or titles.
For example, an older property deed may reference landmarks like trees or fences that no longer exist, leaving the boundary lines ambiguous.
Disputes can also arise when one property owner builds a structure—like a fence, shed, or driveway—that encroaches on a neighbor’s land.
Sometimes, new property developments or subdivisions can change previously established boundaries, causing confusion and disagreements.
One of the best ways to prevent boundary disputes is by having a professional land survey conducted before purchasing or developing a property.
A survey provides an accurate, up-to-date description of your property’s boundaries.
If the survey identifies any discrepancies with existing deeds or records, they can be resolved before conflicts arise.
In fact, many states require land surveys as part of real estate transactions, and the cost typically ranges from $400 to $1,000—an investment well worth avoiding future litigation.
If a boundary dispute occurs, it’s important to address the issue promptly.
Many disputes can be settled through mediation, where both parties work to find a mutually agreeable solution.
If mediation fails, legal action may be necessary. In court, a judge may order a new survey or decide the case based on historical property records and prior agreements.
The legal process can be expensive and time-consuming, with costs potentially exceeding $10,000 depending on the complexity of the case.
To avoid such outcomes, seeking professional legal advice early on is crucial.
Disclosure issues are a frequent source of real estate litigation, particularly when a seller fails to reveal known problems with the property.
Real estate transactions require transparency—buyers rely on the information provided by sellers to make informed decisions.
If important details are hidden or omitted, it can lead to lawsuits after the sale is completed.
Sellers must understand their legal obligations to avoid disclosure-related disputes, and buyers should be thorough in their inspections to protect themselves.
In most states, sellers are legally required to disclose any known material defects that could affect the property’s value or the buyer’s decision to purchase. This includes issues like water damage, structural problems, or mold.
Failing to disclose such problems can result in the buyer filing a lawsuit for misrepresentation or fraud.
For example, if a seller is aware of foundation issues but does not inform the buyer, the buyer may discover the problem later and be forced to pay thousands of dollars in repairs—leading to legal action to recover those costs.
The best way for sellers to avoid litigation is to be upfront about all known issues.
When selling a property, it’s crucial to be transparent and disclose any known defects or issues to potential buyers.
However, even well-intentioned sellers can overlook certain disclosures, which can lead to legal disputes after the sale.
Disclosing all known issues ensures transparency in the transaction and builds trust between the buyer and seller.
Buyers who discover undisclosed defects after closing on a property have the right to take legal action against the seller.
In such cases, the buyer may sue for damages to cover repair costs or request that the sale be rescinded altogether.
These lawsuits can result in significant financial consequences for sellers, including paying for the buyer’s legal fees.
To protect themselves, buyers should always conduct thorough inspections before completing the sale and consider hiring a professional to check for issues that may not be immediately visible.
Tenant-landlord disputes are a common occurrence in real estate, particularly in rental properties.
These conflicts can arise from a variety of issues, including unpaid rent, property damage, or disagreements over lease terms.
Disagreements over rent payments, security deposits, and property maintenance often spark disputes between landlords and tenants.
For example, if a tenant withholds rent due to unresolved maintenance issues, the landlord may claim breach of contract, while the tenant argues that their living conditions are unsatisfactory.
Similarly, disputes over the return of a security deposit at the end of a lease are frequent.
A landlord may withhold the deposit for alleged damage to the property, while the tenant claims normal wear and tear. These conflicts can escalate quickly if not addressed promptly and properly.
A well-drafted lease agreement is the foundation for a smooth tenant-landlord relationship.
The lease should clearly outline the rights and responsibilities of both parties, covering everything from rent payments and due dates to maintenance obligations and procedures for ending the lease.
When expectations are clearly stated, there is less room for misunderstanding.
For instance, specifying whether tenants are allowed to make alterations to the property, or who is responsible for repairs, can prevent disputes down the road.
Landlords who use generic leases without tailoring them to their specific property and tenant relationships often face avoidable conflicts.
Both landlords and tenants have legal responsibilities that must be upheld to maintain a fair and functional rental relationship.
Landlords are typically required to keep the rental property in a habitable condition—providing safe living spaces, functioning utilities, and necessary repairs.
Tenants, on the other hand, are expected to pay rent on time, maintain the property, and abide by the terms of the lease.
When these responsibilities are breached, it can lead to legal action.
Conversely, a tenant who causes significant damage to the property may face eviction and be held liable for repairs.
Real estate litigation can be costly and time-consuming, but with the right guidance, many issues can be avoided before they arise.
If you need legal assistance to prevent common real estate disputes, KingBarnes is here to help.
Contact our North Wildwood estate planning lawyer today at 609-522-7530 to ensure your real estate transactions are smooth, secure, and legally sound.
