February 26th, 2018 at 9:02 am
Answer: Specific performance is a special legal remedy. In this context, it is a court order ordering the seller to sell the property to the buyer as promised. A seller who fails to comply with the court order can be held in contempt of court, which may entail paying a fine or even jail time.
As background, when one party breaks or breaches a contract, the other non-breaching party will typically sue to recover monetary damages suffered as a result of that breach. We’ll assume for the sake of simplicity that mediation and arbitration are not required. For a real estate purchase agreement, a buyer’s monetary damages for a seller’s breach are usually limited to the buyer’s out-of-pocket costs, such as a credit report, appraisal fee, and inspection fee. Recovering such a nominal amount of money would generally be considered inadequate for someone who has the right to buy a unique piece of real property. When monetary damages are inadequate, the law allows a court (through the lawsuit process) to grant the buyer specific performance as an alternative to money.
Like what you see here? Sign up for more! Our free e-newsletter informs you of listings in your community, insider real estate tips, the latest in home trends, and more.
