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The compensation recoverable in a lawsuit by a complainant who sustained an injury, to his or her person or property, through the act or default of another. Determining the appropriate measure (amount) damages for specific types of injuries is complex. In cases of fraud, courts often use the benefit-of-bargain rule, awarding as damages the cash difference between the actual value of the property and the value of the property as fraudulently represented to the buyer. In some cases, the courts apply the “out-of-pocket” rule, awarding as damages the difference, if any, between the actual value of what the plaintiff (the person seeking damages) paid (i.e., the consideration) plus any amounts expended in reliance on the fraudulent party and the actual value of what was received.

Often the seller in a real estate contract retains the buyer’s deposit money as damages when the buyer decides not to perform the contract to purchase the property. Sometimes the parties agree when signing their contract that a defaulting party will pay a certain amount to liquidate or settle any damages. Damages recoverable by an owner for a lessee’s breach of contract to lease would be the excess (if any) of the agreed or contract rent, over and above the rental price the owner would be forced to accept in reletting the premises in a pressure situation. The burden of proving damages is always on the plaintiff.
Dearborn Real Estate Education
This "Word of the day" is excerpted from The Language of Real Estate, 6th Edition by John Reilly (published by Dearborn Real Estate Education, 2006 copyright). To purchase the complete book, with over 2800 key terms and definitions, or to browse through Dearborn's hundreds of other professional real estate titles, including Real Estate Technology Guide by Klein, Barnett, Reilly, click here.