According to the English rule, what is the limit of recovery for failure of title?

The English rule specifies that in the event of a failure of title in a real estate transaction, the limit of recovery is typically the return of earnest money and any out-of-pocket expenses the buyer incurred. This principle is rooted in the idea of compensating the buyer for the direct financial losses resulting from the failed transaction, without granting them the more expansive expectation damages that might be seen in other legal contexts.

This approach ensures that the buyer is restored to the position they were in prior to the transaction attempt, specifically by recovering their initial investment and any reasonable expenses they incurred during the process of the transaction. It primarily addresses the tangible costs rather than hypothetical future gains or overall value assessments which could fluctuate based on market conditions.

Other choices, such as expectation damages or full contract performance costs, would allow for a broader recovery window that could lead to excessive and unpredictable liability for sellers, thus deviating from the foundational principles of the English rule. This makes the prescribed limit of recovery pragmatic and equitable.