Default Remedies - What Happens if it All Goes Wrong?
Louisiana REALTORS • March 16, 2020
DEFAULT REMEDIES IN THE
LOUISIANA RESIDENTIAL AGREEMENT TO BUY OR SELL
WHAT HAPPENS IF IT ALL GOES WRONG?
By: Patricia B. McMurray, JD and Melissa Grand, JD
Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
450 Laurel Street, Chase Tower North, 21st Floor
Baton Rouge, Louisiana 70801
Consider this scenario: Buyer Boudreaux finds the house of his dreams. The house is owned by Seller Sabine. After negotiations, Boudreaux and Sabine sign the Louisiana Residential Agreement to Buy or Sell (the “Agreement”). Then it all goes wrong. Sabine defaults under the Agreement. What can Boudreaux do now?
The Agreement has several available remedies for the buyer and seller in the event of default. The options include (1) declaring the Agreement null and void, (2) termination of the Agreement, (3) specific performance, and (4) stipulated damages. Other potential remedies include return of the deposit, and recovery of broker fees, attorney’s fees and costs.
DECLARE THE AGREEMENT NULL AND VOID
In the event of default, a buyer or seller may declare the Agreement null and void. The Agreement provides in Lines 258-260:
Further, the Agreement provides in Lines 268-270
This means that, in our scenario, Boudreaux can declare the Agreement null and void. Boudreaux and Sabine would both walk away from the sale.
TERMINATION OF THE AGREEMENT
In the event of default, a buyer or seller may seek to simply terminate the Agreement.[1] The Agreement provides in line 262:
Further, the Agreement provides in Line 270:
In our scenario, Boudreaux can file a lawsuit and request an order from the Court terminating the Agreement.
SPECIFIC PERFORMANCE
Upon default, a buyer or seller may also require specific performance under the Agreement. The Agreement provides in Line 262:
Further, the Agreement provides in Lines 270-271:
Specific performance is a Court ordered remedy with the goal being to put the damaged party back into a position as if the breach in contract never occurred.[2] This means that a buyer or seller may seek specific performance of completion of the home sale. So, Boudreaux can file a lawsuit requesting the Court to order Sabine to sell the home to Boudreaux.
If a Court determines that specific performance is not practical under the circumstances, a Court may alternatively award money damages.[3] In our scenario, if the Court finds that ordering Sabine to sell the home to Boudreaux is not practical, the Court may alternatively award Boudreaux money damages.
STIPULATED DAMAGES
The Agreement contains a stipulated damages clause.[4] The Agreement provides in Lines 262-263:
The Agreement provides in Lines 271-272:
The stipulated damages provision is provided in part to eliminate the need for a calculation of damages if the seller or buyer defaults; however, some courts have required a seller or buyer to provide proof of damage. Stipulated damage clauses are designed to both fix the amount of the damages caused by nonperformance of an obligation and to encourage performance of the obligation.[5]
A stipulated damages clause is for recovery of damages to compensate the wronged party for his or her loss. Stipulated damages are not punitive damages or damages intended to “punish” the defaulting party.
The Agreement provides that a buyer or seller may demand and/or sue to terminate the Agreement and for 10% of the Sale Price as stipulated damages. However, if the clause is challenged, the Court must determine the reasonableness of the amount stipulated in the contract by asking whether the parties attempted to approximate actual damages when they agreed to the stipulated damages provision of the Agreement.[6]
In our scenario, Boudreaux can file a lawsuit requesting the Court to order Sabine to pay 10% of the Sale Price to Boudreaux. If Sabine contests the stipulated damages clause, the Court will examine the reasonableness of the stipulated amount in making an award. This means the Court may award less than 10% of the Sale Price to Boudreaux.
DEPOSIT
The wronged party may also seek a return of the Deposit (in the case of the seller’s default) or to retain the Deposit (in the case of the buyer’s default).[7] The Agreement provides in Line 264:
The Agreement provides in Line 274:
Boudreaux’s lawsuit can ask the Court to order Sabine to return his deposit to Boudreaux.
BROKER FEES
The Agreement specifically provides that the seller or buyer may seek recovery of his or her Broker fees.[8] The Agreement provides in Lines 265-266:
Further, the Agreement provides in Lines 275-276:
So, Boudreaux may ask the Court to order Sabine to pay Boudreaux’s Broker fees.
A court has discretion in awarding Broker fees to the prevailing party,[9] so Boudreaux is not guaranteed to be successful in his request.
ATTORNEY FEES AND COSTS
In Louisiana, a party may recover attorney’s fees from an opposing party only in two specific instances: (1) where there is a contract between the disputing parties that explicitly provides for payment of the attorney’s fees incurred by the opposing party, or (2) where a specific Louisiana statute requires the payment of the opposing party’s attorney’s fees.[10]
The Agreement specifies that the prevailing party in litigation to enforce any provision of the Agreement “shall” be awarded their attorney’s fees and costs.[11] The Agreement provides in Line 265:
Also, the Agreement provides in Line 275:
In our scenario, Boudreaux hired a lawyer to file his lawsuit against Sabine. In the lawsuit, Boudreaux can request that the Court order Sabine to pay Boudreaux’s attorney’s fees and costs.
DISCLAIMER
These materials are to be used for informational purposes and should not be construed as specific legal advice. These materials are not designed to cover every aspect of a legal situation for every factual circumstance that may arise regarding the subject matter included.
This publication is for reference purposes only and association members or other readers are responsible for contacting their own attorneys or other professional advisors for legal or contract advice. The comments provided herein solely represent the opinions of the authors and is not a guarantee of interpretation of the law or contracts by any court or by the Louisiana Real Estate Commission.
[1] See Agreement, line 262.
[2] La. Civ. Code art. 1986 provides:
Upon an obligor’s failure to perform an obligation to deliver a thing or not to do an act, or to execute an instrument, the court shall grant specific performance plus damages for delay if the obligee so demands. If specific performance is impracticable, the court may allow damages to the obligee.
Upon a failure to perform an obligation that has another object, such as an obligation to do, the granting of specific performance is at the discretion of the court.
[3] Id.
[4] See Agreement, lines 258-276.
[5] See Philippi v. Vigueric, 606 So. 2d 577 (La. App. 5th Cir. 1992).
[6] See Camey v. Boles, 25, 905 (La. App. 2d Cir. 9/21/94) 643 So. 2d 339 writ denied. 94-2592 (La. 12/16/94) 648 So. 2d 391.
[7] See Agreement, lines 264 and 274.
[8] See Agreement, lines 266 and 276.
[9] See Whitbeck v. Champagne, 2014-245 (La. App. 3 Cir. 10/1/14), 149 So. 3d 372, 386.
[10] See generally Dipaola v. Municipal Police Employees’ Retirement System, 2014-0037 (La. App. 1 Cir. 09/25/14); 155 So.3d 49, 52, writ denied, 2014-2575 (La. 02/27/15); 159 So.3d 1071.
[11] See Agreement, lines 264-265 and 274-275.
2025 Extraordinary Legislative Session Wrap-up
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Louisiana REALTORS® wraps up 2025 and looks forward to 2026! Louisiana REALTORS® gathered in Baton Rouge from October 7–8 for the 2025 Fall Governance Meetings, a dynamic two-day event filled with professional development, strategic planning and member engagement. The day before the conference offered the conclusion to the 2025 LR Leadership Program with participants graduated from the yearlong program after a half-day session. The 2025 graduates include: Torri Byrd, Shawn Carter, Bradley Cook, Stefany Deroche, Mignon Richard Díaz, Alfra Dixon, Thaddeus Dixon, Glen Elliott, Yvonne Graham, Charlotte Johnson, Michelle LaBanca, Slagle McGuffee, Ellen Monroe, Matt Noel, Ros Pack, Tiffany Pellerin, Latonia Riggs, Shannon Rodi Nash, Trish Skellham, Rebecca Slone and Charlotte St. Romain. Additionally, a sold-out, full-day AI-Powered Real Estate Professional Certification course led by industry expert Matthew Rathbun blew away attendees and had them leaving the session with such invigoration. The first official day of the conference held focus on professional development and networking. Tuesday opened with an informative session entitled Professional Liability 101 from Rice Insurance Services Center, offering critical insights into E&O and risk management. RPR's session brought a wealth information to attendees and offered a hands-on learning experience for the tools offered online. Targeted sessions like the Local AE Meeting and the YPN Advisory Council Open Meeting provided space for peer exchange and innovation. The day concluded with a festive Opening Reception sponsored by Louisiana YPN, bringing members together to celebrate and connect. The next day offered collaboration and celebration with Closing the Affordability Gap, presented by the Louisiana Housing Corporation, equipping REALTORS® with tools to better serve clients in today’s market. Regional caucuses followed, allowing members from across Louisiana to discuss local issues and share best practices. The Board of Directors Meeting brought the governance portion of the event to a close with strategic decisions for the year ahead. At the Board Meeting, Chris Brock, Northeast REALTORS® of Louisiana; Trish Leleux, Greater Central LA REALTORS® Association; Synde Devillier, Bayou Board of REALTORS®; Scott McCubbin, Bayou Board of REALTORS®; Amber Morrow, Greater Fort Polk Area REALTORS®; and David Moses, Greater Central LA REALTORS® Association; were elected as 2026 At-Large Directors. The grand finale? A spirited LSU Pregame Fan Experience and the highly anticipated Installation Ceremony, where new leadership was formally welcomed in a celebration of community and commitment. Louisiana REALTORS® looks forward to hosting REALTORS® from around the state at the Winter Leadership Conference, March 3-4, 2026, at the Live! Casino & Hotel in Bossier City. We would like to thank our sponsors Greater Baton Rouge Association of REALTORS® (GBRAR) , Zillow , Dax Roy Appraisals, Supra, American Home Shield, Guard Home Warranty fo r their generous support in helping make this conference happen!
