A Michigan seller signed a purchase agreement with buyer Alex for $410,000. The contract had no liquidated damages clause. Alex defaulted, and the seller relisted the property. After 90 days on the market, the seller accepted a new offer for $395,000. The seller also incurred $4,200 in carrying costs (mortgage payments, taxes, insurance) during the relisting period and $1,500 in relisting marketing expenses. The seller sues Alex for breach of contract. What is the seller's most likely recoverable compensatory damages amount under Michigan contract law?
Correct Answer
A) $20,700, representing the price difference plus carrying costs and relisting expenses
Under Michigan contract law, compensatory damages for a seller when a buyer breaches a purchase agreement (with no liquidated damages clause) are designed to put the seller in the position they would have been in had the buyer performed. The seller's recoverable damages include: (1) the difference between the original contract price and the eventual resale price ($410,000 - $395,000 = $15,000), (2) carrying costs incurred during the period the property was off the market due to the breach ($4,200), and (3) reasonable relisting and marketing expenses ($1,500). Total = $15,000 + $4,200 + $1,500 = $20,700.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Equitable title is the buyer's interest in a property after a purchase contract is signed but before closing, giving the buyer the right to acquire legal title in the future. The seller retains legal title until the deed is delivered at closing.
A financing contingency makes the purchase contract conditional upon the buyer obtaining mortgage approval within a specified time period. If the buyer cannot secure financing, they can cancel the contract and receive their earnest money back.
An inspection contingency gives the buyer the right to have the property professionally inspected within a specified time frame and to negotiate repairs or cancel the contract based on the findings.
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