A recent decision of the Illinois First District Court of Appeals in 1472 N. Milwaukee, Ltd. v. Feinerman, 2013 IL App(1st) 121191, illustrates the severe consequences that can result from failing to honor the terms of a real estate contract. In Feinerman, the plaintiff corporation, 1472 N. Milwaukee, Ltd. (“Milwaukee”), was the owner of a commercial building located in Chicago, Illinois. In 2006, Milwaukee listed the building for sale at a purchase price of $995,000.
On September 27, 2006, the defendant, Lyle Feinerman, entered into a real estate purchase contract for the building at a sale price of $1,200,000. Feinerman failed to show up at the November 17, 2006 closing date, and again at a December 8, 2006 closing. In January 2007, the property was relisted, and, after several potential sales fell through, was sold for $911,500 in July of 2007.
In March of 2009, Milwaukee filed an action against Feinerman for breach of the real estate sales contract. Following a prolonged trial, the court awarded Milwaukee general damages amounting to the difference in sales price between Feinerman’s agreed purchase price of $1.2 million and the July 2007 sale price of $911,500.
The court also awarded Milwaukee the following consequential damages:
- $10,000 for interest paid on a mortgage during the “carry period” (the period of time between the date of the breach and the later sale).
- $1,100 for attorney fees incurred due to the failed closing.
- $675 for a land survey.
- $23,457.40 for real estate taxes incurred by Milwaukee during the carry period, which was later reduced to $4,618.
Milwaukee was ultimately award a final judgment of $194,125.44, and Feinerman appealed. On appeal to the First District Court of Appeals, Feinerman argued that the trial court erred in awarding general damages to Milwaukee, and by awarding consequential damages for mortgage interest and real estate taxes during the carry period.
In overruling Feinerman’s objection regarding the award of general damages, the First District noted that, under Illinois law, the measure of damages in an action for breach of a land sale contract is the difference between the contract price and the fair market value of the land on the date of the breach. The Court then held that the trial court was justified in determining that the resale price was representative of the building’s fair market value on the date of Feinerman’s breach.
In overruling Feinerman’s objection regarding the award of consequential damages, the Court determined that the trial court’s awards of mortgage interest and real estate taxes were not unreasonable or against the manifest weight of the evidence presented.
The Feinerman case demonstrates the importance of potential purchasers of property obtaining the services of a professional that does. If you have questions regarding steps involved in the purchase of real estate, or need additional information about real estate transactions, contact the experienced real estate attorneys at The Slater Firm, Ltd. today.