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BLOG / 02.15.24 /Avi Strauss

The Right to Sue for Specific Performance

A potential purchaser is right to invest ample time, money and effort in the due diligence process before signing a real estate contract of sale. Once the contract is signed, the purchaser can finally allow themselves to dream about the tantalizing possibilities presented by the acquisition.

It is therefore frustrating – if not downright devastating – when a seller improperly reneges on its commitment and refuses to close in accordance with the signed contract. Under these circumstances, what recourse does the purchaser have and what remedies are available?

The purchaser can sue for specific performance.

It is widely recognized that real property is unique and that, if a seller breaches a real estate contract and refuses to close, monetary damages may not suffice to make the purchaser “whole.” The purchaser can sue for specific performance – an equitable remedy under which the court may compel the seller to perform and close on the contract.

However, the right to specific performance only attaches under certain circumstances. To prevail on a claim for specific performance, the purchaser must be able to show that:

  • It substantially performed;
  • It was ready, willing and able to perform its remaining obligations under the contract;
  • The seller was able to sell the subject property;
  • And the buyer had no adequate remedy at law.

Additionally, a purchaser’s right to seek specific performance may be circumscribed by the terms of the contract of sale. If the contract of sale contains a so-called restricted remedies provision – a clause which specifies the relief that may be available to the purchaser in the event of a breach – the contract provision will govern. This means that only those remedies made available under the contract can be pursued.

Courts are not in the business of rewriting contracts.

This is especially true of real estate contracts negotiated by sophisticated parties. So, if the contract denies the purchaser the right to specific performance in a given situation, the purchaser should not expect the courts to rewrite the contract on their behalf. Instead, the purchaser may have to accept that they are limited to recovery of the down payment or other damages specified under the contract.

At Smith Buss & Jacobs, our attorneys represent a diverse client base in litigations that arise from a variety of complex real estate transactions. If you are a buyer or seller with questions or concerns about a real estate sale, please feel free to give us a call.