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Reformation

DEFINITION

Action that corrects an error in a contract or deed.

EXPLANATION

Reformation refers to a court’s ability to alter the contents of a legally-binding contract in order to clarify conflicting or unclear terms. It is common for parties to misunderstand one or more sections of contract. Reformation is used to correct the language in a contract to further the intended goals of both parties.

Reformation can only be utilized by parties who have acted in good faith in the original execution of the 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.

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