Definition of "Reformation"

Aimia Mccalop real estate agent
Aimia Mccalop, Real Estate Agent RE/MAX Precision Realty

Reformation in real estate means a legal action to straighten out an erroneous deed, a misleading document, an error, a paragraph, or a contract entirely which resulted from an unintentional mistake or fraud. However, suppose only one party is at fault. In that case, reformation does not apply unless the person’s error was due to the other party’s fraud. This misdeed does not reflect the parties’ original intentions. In other words, it does not capture and portray their agreement reached based on consensus.

Reformation in law and contracts

Suppose a party notices a breach of contract or agreement problems. They can apply for a course correction, namely reformation. Reformation is a term used in legal discourse as well, describing a procedure to correct a law so that it fully captures the lawmakers’ original intents. During the reformation, the legal representatives of both parties revise and modify the contract to authentically represent the initial agreement in question as both parties conceived from the very start.

What does reformation in real estate refer to?

Property buyers, aspiring real estate investors, sellers, landlords, and tenants can suddenly bump into a real estate puzzle. An unforeseen natural disaster or an unexpected financial difficulty, such as the housing market crash in 2021, will ruin their original housing intentions. For this reason, they will look for adjustments to the initial contract. In such instances, real estate reformation may bring a remedy to improve a now unreasonable contract.This is the case when reformation happens with good reason. 


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Rights of first refusal, purchase options, and other real estate covenants affecting a prospective transaction can be extremely irritating. Frequently, a seller believes that a third party hijacks their transaction. Moreover, the buying client believes that someone stole their hard-earned home. You can apply for reformation of a contract to eliminate unreasonable restraints on alienation. Many of these alternatives are legally binding. However, some may impose an arbitrary limit on real estate transfers.

Fraudulent intentions or simple mistakes can lead to reformation procedures in real estate. 

Suppose a homeowner sells their property to a buyer. The seller establishes the real estate’s value in the contract. Still, the declared worth doesn’t reflect reality. Two scenarios come into the foreground. Either a simple mistake occurred. Or the seller intended to deceive the homebuyer. In the latter case, the right course of action would be that both parties take the contract in question and go to court. 

The court of law will decide whether they should put reformation into practice. If they choose to proceed, the court can adjust the text’s wording. Thus, the new contract will include the actual property’s worth and outline its home price without misleading information. 

A reformation process can result in punitive fees.

On the other hand, if they suspect fraudor neither party is entirely content with the contract’s new form and wording, they can appeal for additional adjustments. In such instances, a reformation may not be sufficient to reach a mutually beneficial settlement. In addition, the court can find the seller culpable and penalize them. Moreover, the judge can force the seller to give the buyer financial compensation if they saw the seller’s treacherous intention.

Don’t let unfortunate events take you by surprise!

We recommend you work together with top-tier local real estate agents at all times! They undoubtedly can spot dishonest intent and will notify you if the other party tries to mislead you in any way. If the case ends up in court over a contract dispute and you wish to have a contract reformed, seek an expert lawyer’s legal advice to ensure that your flights are in good hands!.

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