Disagreements are common when it comes to buying and selling real estate. These can happen for many reasons, such as when one party doesn’t follow the terms of a contract or when there is a misunderstanding between the two parties. Specific performance is one of the most important legal remedies for real estate disputes. This idea is important for everyone who is involved in real estate deals, even if it’s not something that most buyers and sellers think about every day. This article talks about what specific performance is, when it applies, and how it affects both buyers and sellers in real estate deals.
What is Specific Performance in Real Estate?
In some real estate disputes, you can use specific performance as a legal remedy. If one party to a real estate contract doesn’t do what they agreed to do, the other party can ask the court to enforce the contract as it is written, forcing the person who didn’t do what they were supposed to do to do what they were supposed to do. In short, the court can make a seller go through with the sale of property or a buyer finish the purchase as agreed.
Damages are money paid to the other party for breaking a contract, but specific performance means that the contract must be completed as agreed. This remedy is more common in real estate deals than in other types of contracts because real estate is seen as one-of-a-kind, and money damages may not be enough to make up for the non-breaching party.
Why is Specific Performance Important in Real Estate?
Real estate is often a one-of-a-kind asset, and for many buyers, the thought of missing out on a chance to buy a specific property can be very upsetting and costly. On the other hand, sellers may also have problems if a buyer doesn’t follow through on the contract, especially if the property is hard to replace or if the market changes in a bad way.
When one party doesn’t follow through on their end of the deal, specific performance can be used to make them do so. It gives both buyers and sellers a strong way to make sure that the terms of their deals are followed.
When Does Specific Performance Apply to Real Estate?
Not all real estate contract disputes automatically get specific performance. It is usually called upon in these situations:
1. Property that is One of a Kind
When the subject of a contract is one of a kind or has special value to the person who wants it enforced, courts are more likely to grant specific performance. Real estate is always one of a kind, whether it’s because of where it is, how it’s built, or what it has. For example, if someone is buying a historic home or a property in a very desirable area, they might not be able to find a similar property that is as good.
2. Not Being Able to Close the Deal
Specific performance can force the party that isn’t following through on the deal to do what they agreed to do if either the buyer or the seller doesn’t follow through on the terms of the contract. If a seller tries to back out of a deal for reasons other than those clearly stated in the contract, they may be told to go ahead with the sale. In the same way, if a buyer doesn’t follow through with the purchase, the seller might ask for specific performance.
3. Damage that Can’t Be Fixed
Specific performance is usually given when the person who was hurt can show that they would suffer irreparable harm if the contract is not enforced. For example, a seller might say that they would lose money or suffer in some other way if a buyer doesn’t buy the property, especially if the market has changed or the property is hard to sell again.
4. Terms that are Clear and Certain
The terms of the contract must be clear and specific in order to ask for specific performance. A court may not enforce a real estate contract if it is unclear or missing important information. For specific performance to apply, both parties must know exactly what they have to do under the agreement.
What Do Real Estate Attorneys Do in Specific Performance?
If you are buying or selling real estate, you need to have a real estate litigation lawyer or real estate attorney with you when you have problems with contracts. Real estate lawyers are experts at reading and understanding complicated contracts, and they are very important when it comes to enforcing specific performance.
1. Looking at Contract Disagreements
A real estate lawyer can look over the contract and see if specific performance is a good way to fix the problem. They will carefully look over the terms of the agreement, any clauses that deal with breach, and the situation as a whole that led to the disagreement.
2. Talking and Coming to an Agreement
A good lawyer can help the buyer and seller reach a settlement before going to court, which can save them a lot of money. Mediation or arbitration is often used to settle disputes outside of court. In these cases, both sides agree to do what they promised without having to go to court.
3. Help with Lawsuits
If you can’t work out a disagreement peacefully, an experienced real estate lawyer will represent you in court. They will file the right legal papers, argue the case in front of the judge, and try to get a judgment that makes the real estate contract’s terms stick. This may mean going to court to get a specific performance order in some cases.
4. Knowing How Much Lawyers Charge
When hiring a real estate lawyer, it’s important to know how much they will charge. The fees can be different depending on how complicated the case is, how experienced the lawyer is, and where the deal is taking place. Real estate lawyers usually charge by the hour, a flat fee for certain services, or a mix of the two. But when there are big disagreements or lawsuits, legal fees can add up quickly, so it’s important to think about the costs and benefits of pursuing specific performance.
Important Things for Buyers and Sellers to Think About
For Buyers:
If you’re a buyer, it can be very frustrating and financially devastating if a seller refuses to go through with the sale, especially if the property is one of a kind. Here are some ways to make sure you’re safe:
- Know the Contract: Your real estate contract should be clear, detailed, and have contingencies that protect your interests. If the seller doesn’t do what they promised, you might be able to get specific performance as a remedy.
- Know Your Rights: If the seller doesn’t follow through on the contract, specific performance lets you make the sale happen. You might want to talk to a real estate lawyer to see if you have a strong case.
- Get Ready for the Process: Specific performance can be a powerful tool, but it’s not always easy to get. It might take a while and involve long legal battles, so make sure you’re ready for the process.
For Sellers:
Sellers may have to deal with buyers who try to back out of the deal. If this happens, you might want to think about getting specific performance to make the buyer finish the deal:
- Check the Buyer’s Financial Ability: Make sure the buyer can afford to pay for the item before signing a contract. You can protect yourself by putting contingencies in the contract that say the buyer has to show proof of funds or loan approval.
- Check the Market: If the buyer doesn’t pay, specific performance might be an option, but you also need to think about what’s going on in the market right now. If property values are going down, selling the property again might not be as profitable, and specific performance might not be the best way to go.
- Get a Lawyer: If there is a breach, a real estate lawyer can help you figure out your legal options and walk you through the process of getting specific performance or other remedies.
Other Options Besides Specific Performance
Specific performance is a strong remedy, but it’s not always the best choice for every situation. There are a number of options that buyers and sellers can think about:
1. Money Damages
If the breach isn’t too bad or if the parties can be paid back in money, they may choose monetary damages instead of specific performance. A buyer, for instance, might want to be paid for the money they lost because the seller didn’t follow through with the deal.
2. Ending the Contract
Contract termination is another option besides specific performance. It lets the party that didn’t break the contract leave the agreement without having to do anything else. This might be a good answer if doing what was asked would be too expensive or difficult.
3. Rescission
Rescission means canceling the contract, which means that the agreement is no longer valid. This option is sometimes chosen when both parties have not done what they promised to do in the contract or when the contract is found to be fundamentally flawed.
Final Thoughts
Specific performance in real estate is an important legal way to make sure that contracts are followed when one party doesn’t do what they promised. It’s important to know how specific performance works if you’re a buyer trying to get a one-of-a-kind property or a seller trying to make sure a purchase agreement is followed. You can protect your rights and get the help you need to deal with disputes and legal issues by hiring a qualified real estate lawyer.
To lower the chance of disagreements, always make sure that your contract is well-written, clear, and free of any vague language when you buy or sell real estate. The most important thing is to stay informed, get legal advice, and be ready for the complications that can come up in real estate transactions, whether you want specific performance or are considering other options.
