Breach of contract is a rather all encompassing legal phrase that can be the basis for a suit for damages or the grounds for a defensive argument within another action, such as Arizona foreclosure defense.
In Arizona real estate transactions, the most common breaches are failure of the seller to disclose property defects, or failure to perform by either party to the contract. Breach of contract can also be asserted as grounds for specific performance. If a buyer or seller defaults on closing escrow, for example, either party may have the elements necessary to compel performance of the contract terms and to obtain an order in the form of a mandatory injunction against the defaulting party forcing it to sell or purchase the property. In this event, the plaintiff is seeking to enforce the contract, not to be awarded damages for the defendant’s breach.
In Arizona foreclose defense actions, a breach of contract claim is almost always warranted. The breach is related to the Arizona deed of trust provisions such as failure to provide pre-acceleration notice or some other term of the contract or the promissory note.
Recently, certain loan servicers have arbitrarily force-placed insurance on Arizona properties, then demanded that Arizona borrowers pay the more expensive premium or be declared in default. A lender only has the right to place its own insurance if the existing policy lapses or does not meet the lender’s coverage standards. In a lapse, the lender may place its own policy without the borrower’s approval or notice, thus the term, “force-placed”. Our law firm has defended Arizona homeowners against foreclosure in which the lender clearly breached the deed of trust by force-placing its own policy on the property where there was no lapse of the borrowers’ insurance.
However, if the lender disapproves the borrower’s carrier or coverage, it must give notice of such disapproval before force-placing another policy, in our view of the Arizona trust deed provisions.
Our law firm also has also mounted Arizona foreclosure defense cases on behalf of Arizona homeowners facing foreclosure where a lender has refused to remit the insurance proceeds following a covered loss, such as a fire. The deeds of trust in these instances were commercial loans and these documents provide the lender with more options on how they can handle insurance proceeds. Our suits against these lenders allege breach of contract, also.
Our law firm handled an Arizona foreclosure defense case where the lender refused to pay over the insurance proceeds from a fire and conducted a trustee’s sale while holding the borrower’s funds. Incredibly, the money held by the foreclosing lender would have more than cured the delinquent mortgage payments on the Arizona property.
Commensurate with a breach of contract claim, the firm will usually include a claim titled “Breach of the Duty of Good Faith and Fair Dealing”. In Arizona, each valid contract carries with it a duty on all parties to do nothing which prevents the other party from receiving the benefits of the contract. This claim is tort-based but related to the contract. Wrongful foreclosure defendants—that is, lenders foreclosing on Arizona real estate—do not care for this claim because tort damages are broader than contract damages and can support a claim for punitives.