When there is a breach of certain types of contracts, the aggrieved party may seek the equitable remedy of specific performance, that is, a court order compelling the breaching party to undertake to perform or to complete performance of such party’s obligations under the contract. Specific performance is available whenever the subject matter of the contract is unique or in other circumstances where the usual remedy for a breach of contract, money damages, is inadequate. Because real estate is generally considered to be unique, the remedy of specific performance is presumed to be available even though the alternative remedy of money damages is also available.
To establish a claim for specific performance of a real estate contract, the aggrieved party, usually the buyer, must prove (1) the existence of a written contract containing reasonably specific terms signed by or duly authorized by the other party and otherwise binding upon such party, and (2) the breach of that contract by such party. The breach of contract may be shown by (i) a clear repudiation of the contract by the breaching party, (ii) the aggrieved party’s tender of performance, formally or by notice, and (iii) a demand for performance with the aggrieved party ready, willing, and able to proceed to a closing.
A repudiation of the contract may be readily apparent, as in the case where a seller fails to deliver the deed on the specified closing date without explanation, or it may be the result of actions taken prior to the closing date. Where one party sees a repudiation, the other may see a mere request for modification. For example, a buyer and a seller sign an Offer to Purchase (“OTP”) that contains a mortgage financing contingency with a deadline date for a mortgage loan commitment and an earlier deadline date for signing the subsequent Purchase and Sale Agreement (“P&S”). Prior to both deadline dates, the buyer requests an extension of the mortgage loan commitment deadline date. Without more, that request would not likely be considered a repudiation of the OTP by the buyer. On the other hand, the seller’s refusal to sign the P&S containing the original terms of the mortgage financing contingency by the applicable deadline date due to such request by the buyer would likely be considered a repudiation of the OTP by the seller.
A party may make a formal legal tender by appearing at the agreed upon time and place for closing with all closing documents prepared and checks and checkbook in hand with funds in the bank or financing in place. Where a buyer is seeking to enforce the contract, it may be sufficient tender to give reasonable notice to the seller that the buyer is ready and willing to perform, has the purchase price and is able and prepared to pay, and demands the deed, and the seller unconditionally refuses to execute and deliver the deed and accept the purchase price.
A demand for performance should state the closing date, time, and place, what the demanding party understands to be its obligations at the closing and that it is ready, willing, and able to fulfill those obligations, and what it believes are the other party’s obligations at the closing.
Specific performance is characterized as an equitable remedy and whether it is to be granted is within the sound discretion of the judge. It may not be granted to a party who has acted inequitably or in those special circumstances where it would impose an undue hardship on one party or allow the other to obtain an inequitable advantage.
