24 Nov What is Specific Performance
Specific performance is an equitable remedy where a court orders a party to actually perform its contractual obligation, because monetary damages are inadequate to resolve the legal dispute. Generally, the specific performance remedy is sought to complete a previously intended transaction such as the sale of a house.
Real Life Scenario – Specific Performance
Seller puts home up for sale in Queens, New York. Buyer makes an offer on the home and Seller accepts the offer. Seller and Buyer enter into a formal contract for the sale of the property. Per the terms of the contract of sale, the Buyer will have forty-five (45) days to obtain a mortgage commitment. Within the same time frame, the Seller generally works on clearing any title issues. Buyer obtains a mortgage commitment and Seller clears all title issues. The Buyer’s lender then issues a final loan approval and the closing is ready to be scheduled. Suddenly, the Seller changes his/her mind and no longer wants to sell the house. The buyer generally then has two options: 1) the buyer can walk away from the contract and demand his contract deposit back; or 2) Buyer can sue the Seller to specifically perform under the agreed upon terms of the contract (i.e. to sell the house for the specified amount in the contract).
If the buyer elects option two, he/she would need to hire a specific performance attorney to start a lawsuit in court seeking as a cause of cause, specific performance. The objective of the lawsuit is to have the court compel the seller to perform its obligations under the contract of sale, which is to sell the property to the buyer.
The Law – Specific Performance
To enforce the real estate contract and to win in Court on a claim for specific performance, the buyer must establish the following:
- There was a binding contract between the parties
- The buyer performed its obligations under the contract
- The buyer is ready, willing and able to purchase the property
- The seller is able to sell the property
- Seller is unwilling to carry out its obligations under the contract and is in breach of the contract
The buyer bears the burden to show that he/she had the financial capacity to purchase the property, that is that he/she was and remains ready, willing and able to purchase the property. Conclusory allegations that a buyer is ready, willing and able to perform is insufficient to satisfy the burden. The buyer will need to demonstrate with documentary evidence that it was financially capable of closing. Generally, this means that the buyer would need to provide a commitment letter or proof of funds, a title report, confirmation of any final loan approval (if a mortgage was sought).
If you have a dispute with a seller or buyer on a contract of sale for a house, condo or cooperative in New York City, then call us today to speak with a specific performance attorney. Free consultation, use the contact us form or call today at 718-520-0085.