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.
Avoid costly fair housing violations with expert tips on compliant real estate advertising, from listing language to social media targeting strategies.
Week seven of the 2026 Regular Session was one of the most active weeks yet for legislation affecting the real estate industry. Louisiana REALTORS® remained heavily engaged as lawmakers advanced bills dealing with property disclosures, appraiser liability, rent regulation, insurance, blight, redevelopment and other issues that directly affect real estate professionals, property owners and consumers across the state. One of the most important bills this week was HB 1166 by Rep. Kim Carver , which would require disclosures for vacant residential property. The bill was reported from House Commerce with amendments on a 14-0 vote and then amended on the House floor, ordered engrossed, and passed to third reading. Louisiana REALTORS® testified on the bill in committee and worked closely with the author to better posture the legislation. Amendments advanced by our team were accepted by the author, helping improve the bill while preserving a practical disclosure framework that increases transparency without creating unnecessary confusion in the transaction process. Another closely watched issue this week was consumer-fee disclosure legislation. HB 617 by Rep. Mandie Landry moved this week, advancing from House Commerce and then the House floor, while HB 580 , another hidden-fee disclosure bill touching real estate transactions, remains pending. Louisiana REALTORS® is opposed to these measures in their current form to the extent they apply to real estate professionals because they are not well-tailored to the realities of real estate transactions, where many costs are negotiated, variable or controlled by third parties. Louisiana REALTORS® testified in opposition to the bills we oppose and is actively working with the author to better posture the legislation and remove real estate professionals from its scope altogether. On HB 472 by Rep. Alonzo Knox , the rent stabilization bill, the author is expected to try to bring the measure back before the committee next week with amendments. Even so, Louisiana REALTORS® remain opposed to the bill on principle. Price gouging is already illegal under existing law, and government-imposed rent regulation is not the right answer to housing affordability challenges. Louisiana REALTORS® testified in opposition to the bill and continues to oppose the measure because policies like this risk discouraging investment, reducing housing supply, and creating further market distortions rather than solving the underlying problem. HB 468 by Rep. Troy Hebert , which regulates the wholesale of residential real property, remains pending in the Senate Commerce Committee and continues to be an important bill for the industry. Likewise, HB 1027 by Rep. Troy Hebert , dealing with appraiser liability, had a strong week, passing the House 90-0 and moving to the Senate. Both measures are significant because they promote greater clarity, consumer protection and confidence in the real estate marketplace. Blight and redevelopment issues also remained active. HB 284 by Rep. John Wyble , which would allow certain local governments to expropriate blighted property through a declaration-of-taking process, remains subject to call and continues to raise serious concerns about private property rights. By contrast, HB 214 and HB 217 by Rep. Chance Henry , which create tax incentives for the rehabilitation of blighted property, represent a more constructive redevelopment approach by encouraging reinvestment rather than expanding government taking authority. Insurance legislation also remained a major focus this week, with multiple bills heard that could affect homeownership costs, market stability and post-storm recovery. Measures dealing with Louisiana Citizens assessments, pre-suit insurance claim review, the Fortified Homes Program and insurance market transparency all carry real implications for affordability and transaction viability. In Louisiana, insurance remains one of the most important issues affecting the real estate market, and Louisiana REALTORS® continues to closely track that legislation. Taken together, week seven showed that Louisiana REALTORS® remains actively engaged where it matters most: supporting practical transaction standards, protecting private property rights, testifying for and against legislation when necessary, pushing back on unworkable regulation and rent-control-style policies, and advancing policies that strengthen housing opportunity and market stability across Louisiana. Please view the weekly bill tracking report provided by our lobbying team over at Harris, DeVille and Associates.
NAR is pleased to share the latest consumer guide helping buyers navigate shifting interest rates. The one-page guide covers how lenders set rates, the impact of small shifts on monthly payments and strategies to get the lowest rate possible. As a reminder, all guides in this series are available for download—in both English and Spanish—on facts.realtor . Please allow up to two weeks for the Spanish version of the latest resource to be translated and uploaded. For ease of reference, below is a list of the most recent guides: NEW: Navigating Interest Rate Shifts Financing a Renovation When You Buy Staging Your House for a Sale Spotting Deepfake Scams in Real Estate Are You Ready to Invest in Real Estate? Thank you for your continued engagement with the “Consumer Guide” series and for sharing the resources with prospective clients to ensure they have the information they need to find success in their home buying or selling journey. Remember that these guides are for informational purposes only and are not meant to enact or change any existing NAR policy. Be on the lookout for the next consumer guide, which looks at how solar installations may impact home sales transactions.
