A breach of covenant is the failure to obey a legal arrangement. In each contract that is created, each party makes an implied covenant to the other that they will approach the arrangement honestly and in good faith. It is also an unwritten agreement that one party will not interfere with the implied rights of the other party. In matters of real estate, a breach of covenant of good faith arises when one party refuses to uphold their obligations within the contract. In real estate matters, a breach of covenant may occur when a seller decides not to sell a home to a buyer or if a seller backs out of a sales agreement before completing the purchase. In such cases, the wronged party may take steps to start litigation against the other. A court of law may award damages to the injured party.
