A common remedy for a failed purchase and sale of real property is a lawsuit for specific performance. By initiating a specific performance cause of action the buyer or seller of real property asks the court to compel the other party to perform its contractual obligation to either buy or sell the property. In other words, the plaintiff will seek the equitable remedy of specific performance based on the underlying cause of action for breach of the purchase and sale agreement (breach of contract).
These lawsuits are a common remedy pursued for both commercial real estate and residential real estate. In the commercial litigation context, the lawsuit may be based on the failure of a seller to honor an option to purchase leased property or simply a failed purchase transaction. In the residential context, a plaintiff often commences such an action after the escrow for a property does not close.
In order to pursue the specific performance remedy the plaintiff, among other things, must demonstrate the following:
Inadequate Remedy at Law. The remedy of specific performance is only available when a monetary award will not adequately compensate the buyer. California Civil Code section 3387 provides that “land is assumed to have a peculiar value, so as to give an equitable claim for specific performance, without reference to its quality or quantity.”
Adequate Consideration for the contract. There must be adequate consideration for the contract in order to specifically enforce it. This means a fair and reasonable price under the circumstances.
Sufficiently Certain Contract Terms. The contract must be sufficiently certain to make the precise act which is to be done clearly ascertainable. For example, the terms of the sale must be certain so that the Court can enforce the contract according to its terms.
Ready, Able and Willing to Perform. The party seeking specific performance of a contract must prove that it is ready, able and willing to perform the contractual conditions.
Specific performance is commonly pursued in connection with real estate disputes. Because of the unique nature of real property, it often provides the best remedy for a plaintiff who desires to purchase a particular piece of real property.