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Eligible For Specific Performance If Default

Ask the Real Estate Lawyer: Real Estate Law Q&A

REM #LAW 648

By Ilyce R. Glink and Samuel J. Tamkin

Summary: A reader is wondering if they would be eligible for a specific performance in the event of a breach of contract. Sam and Ilyce explain that when a dispute arises, either party has the right to go to court and sue the defaulting party.

Q: When the default paragraph of a form real estate contract reads "in the event of a default, the non defaulting party shall have the right to seek any remedy by law."
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Does this remedy include the right of specific performance? Agents for both the seller and the buyer have told me that I would be eligible for "specific performance" in the event of a breach of contract. If I'm not entitled to "specific performance" what legal remedies will be available me?

A: When a contractual dispute arises between a buyer and a seller, either party has the right to go to court and sue the defaulting party. The issue is whether you can sue the other party for money damages or force the defaulting party to perform under the contract.

If you can settle your dispute with the payment of money, the remedy you would seek would be “at law.” If you can’t settle your dispute with the payment of money and want to force the other party to the contract to perform, your remedy would be to seek “specific performance” in a court of equity.

In general, the only thing a buyer or seller to a contract needs to remember when signing a real estate contract is whether the terms of the contract have limited their remedies. Some real estate contracts have provisions that eliminate a party’s right to sue for specific performance, others eliminate a party’s right to sue for damages and still others eliminate all of a party’s rights and merely give that party the right to get their money back.

If you have not waived your rights under the contract, you usually will have the right to sue for damages or for specific performance -- though suing for specific performance is harder.

A seller can usually be made whole with a cash payment, whereas that doesn’t exactly work for a buyer. Real estate is considered rather unique and by virtue of this uniqueness a court could force a seller to sell a home to you: thus the term specific performance. The seller is specifically ordered to perform under the contract.

In some states, the contract might be required to state that you may seek any remedy at law or in equity. Your contract states that you have the right to a remedy at law. If the laws in you state indicate that you must specifically reference your right in equity, you will only be able to sue for money damages. If courts in your state interpret the clause to allow any type of case, you will be able to sue for specific performance or for money damages.

But we’re wondering why you’re so keen to know about your legal remedies going into the deal. Are you concerned that it isn’t going to work out in the end? Or, are you trying to cover your bases?

Samuel J. Tamkin is a Chicago-based real estate attorney. Ilyce R. Glink’s latest book is 50 Simple Steps You Can Take To Sell Your Home Faster and For More Money In Any Market. If you have questions for them, write: Real Estate Matters Syndicate, PO Box 366, Glencoe, IL 60022 or contact them through Ilyce’s website




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