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Discharged Contract


Release or rescission of the contract by agreement of parties. When a contract is discharged it is no longer valid and hold’s no legal authority over the parties in the agreement.


A discharged contract is a contract that is no longer enforceable, either because of its completion, or due to its unlawful purpose. The following subsection detail the many ways to terminate or change contracts terms. These contractual terms can be altered:









The performance of a contract can be discharged in certain circumstances.

The contract can be discharged if there are certain factors beyond the control of one or both parties that causes an impossibility of performance. For example, if a borrower no longer has the funds to purchase the house or cannot access any lending terms, it would be impossible to purchase the property. Another instance includes the buyer and/or spouse losing his or her job, for example, rendering the purchase impossible. Under these scenarios, the involved party can be excused.

The performance of a party can be excused when the impracticability of performance makes a task difficult or nearly impossible to fulfill. This is also called commercial frustration. If economic circumstances change for one or both parties, said parties can be excused for nonperformance. The most common instance of this is if the buyer can no longer afford to purchase the house, either because of lack of financing, or not possessing enough money to pay the required down payment. Another instance includes the scenario of a seller no longer wanting to sell the property because he or she cannot afford a switch property. The standard reasoning for one’s failure is due to a financial hardship.


The party who is owned an obligation can sign a release letter. A release would discharge the contract, terminating the contract and both parties’ obligation to one another.


An assignment is the process that permits the accepted buyer to transfer the purchase to a friend, family member, or business partner. This gives the assignee the right to either buy itself for themselves through the assignor or assign to someone else. For example, assume Patricia’s purchase offer was accepted by the seller and Patricia realizes she does not want to purchase the property in her name, she could assign the purchase agreement to her husband’s name.


A contract can be discharged because of a breach of contract. A breach can occur when one or both involved parties fail to perform the terms of the deal. The party whose rights are breached has the right to legal lawsuit.

An injury that is sustained by a damaged party can result in monetary damages against the defendant due to a loss of time, prevention of sale or other circumstance. Certain contracts have clauses which allow one party to require the other party to meet an obligation. Specific performance of an obligation can be requested. Specific performance is a court order that requires a party to perform an obligation found in a contract that the defendant has failed to fulfill. Because no two pieces or parcels of land are exactly alike, each scenario is unique and individualistic in nature. Certain scenarios require special attention and not every two cases have the same legal outcome.

Specific performance occurs only in instances wherein a lawsuit is initiated by the damaged party. This process is complex and does not have a definitive resolution as, once again, each case is different. Because of the time-consuming and expensive process of a specific performance, most homeowners do not pursue this route.

Most buyers and sellers involved in residential real estate typically do not have the time nor the resources or reason to be involved in such an arduous process, particularly one where said party is required to wait to obtain a court date, court approval, etc. An alternative to specific performance would be a standard lawsuit where the damaged takes the defendant to court to recover for monetary damages.


Altering a Contract

An existing contract can be altered through reformation of the agreement. In the context of real estate, common reasons why parties may reform a contract are to adjust an error, strengthen a specific provision, or make a section of the agreement more equitable. Additionally, parties of the contract may alter the agreement to conform the changing nature of the transaction. For example, the terms of a purchase contract or rental agreement may change due to specific conditions or requests of one party. In this situation, parties may alter the agreement.

In the event one party does not agree to alter the contract, the contract can be terminated using other methods found in this chapter. If one party objects to the change, the other party can potentially bring about a lawsuit to forcibly alter certain conditions. To save time and money, a lawsuit should only be initiated after both parties to try to resolve discrepancies outside of court. Should issues not be resolved outside of court, the plaintiff must have a valid reason why the defendant is violating the terms of the agreement. If not, the plaintiff will only lose valuable time and money initiating a baseless claim.


Novation is the legal process of replacing a portion of a contract for an additional provision in its replacement or altering the terms of contract such as adding duties for specific parties, or removing a party from the contract.


Both parties can terminate the contract by rescission. Rescission is the legal term that terminates a contract by bringing all parties to their original states prior to the contract’s formation.


Mike and Molly Nash are in contract to buy the Jaque residence. Days before closing, the Nash family decides they no longer wish to buy the house. The Jaque family, furious with the Nash’s actions tells them that their deposit will not be given back to them. Can Mike and Molly sue to get their deposit back?

Under this scenario assuming that all terms were met by the seller (Jaque family) the Jaque family may have the right to keep the deposit because they as sellers met their required obligations. The Jaque family however could return the deposit if they wanted, but likely because of time wasted they may choose to keep the original deposit. The Nash’s may decide to sue. Under this scenario they can only win if the Jaque family has not met all conditions of the deal.

Statute of Limitations

Legal action must be brought within a reasonable time period. There are different maximum recovery periods for different scenarios.

Statutory Recovery Period

To recover title, claimant must file lawsuit within five years.

A lawsuit regarding a written agreement (contract, letter, and agreement) must be initiated within four years.

Fraud cases must be initiated within three years.

Cases regarding oral agreements or verbal agreement must be pursued within a two-year period.

Judgment must be pursued within 10 years of the defendant’s violation.

Actions that must be initiated within 90 days

Civil suits for lost or stolen personal items at a property must be initiated within 90 days. This includes items such as clothing, jewelry, baggage, and others.

Within six months

Action to recover wages, merchandise, goods, and other property seized by an officer or government official must be initiated within six months.

Within One Year

Actions for libel, slander, injury, or death caused by an unlawful or negligent act must be brought within one year.

Within Two Years

A wrongful action on a contract, obligation, or agreement must be initiated within two years.