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."
(article continues below useful links)
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
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 www.thinkglink.com