The sometimes murky concept of “specific performance” has roots going back hundreds of years in the common law, and has been limited in many jurisdictions and areas of law, but specific performance is still alive and well in the world of California real estate litigation. Below, we provide a brief discussion of what specific performance is and when it is available in a California real estate litigation matter.
What is Specific Performance?
Specific performance is an award that a court will order when there is a dispute between two or more parties over a contract. Essentially, the court will force one party to actually go through with performing the terms of a contract, as opposed to allowing the party to breach the contract and pay monetary damages instead. For example, if you entered into a contract with an art dealer to buy a painting, but the art dealer changed his mind, you could ask the court to award specific performance. In so doing, the court would require the art dealer to actually sell the painting for the agreed-upon contract price rather than have him provide you with money damages for your loss.
When is Specific Performance Not Available?
In most contractual disputes, courts will not award specific performance based on the principle that, in a free society, we do not want to force people to undertake actions against their will when another remedy is available. For example, specific performance is generally not available in service contracts; if the magician you hired for your child’s birthday party backs out, a court will not require him to perform through specific performance but will require him to pay damages for your troubles in securing another magician.
Specific performance is also not available in sales contracts where money damages are a sufficient remedy for the plaintiff. What this often comes down to in a sales contract is whether the item to be purchased is unique. For example, if you had a contract to buy a new iPhone 7 and the seller backed out, then you can just as easily buy a different iPhone 7 from any number of other outlets and so the court would not require the seller to go through with the sale although it might require the seller to pay you for any costs incurred with securing an iPhone 7 from a different seller.
Specific Performance in California Real Estate Matters
All of that is background to say that, because a real estate property is generally not interchangeable with another real estate property the same way that an appliance would be, courts are willing to provide specific performance as a remedy to a buyer when a seller tries to back out of a real estate contract. To win specific performance at trial, the buyer will need to show that he or she had met all applicable requirements under the contract, for example depositing the purchase price in escrow per the terms of the contract.
The plaintiff must also show that money damages would be inadequate, but California law states that, “In the case of a single-family dwelling which the party seeking performance intends to occupy, this presumption is conclusive.” What this means is that a court will always find that money damages are inadequate and therefore specific performance is available if a buyer is trying to force the sale of a single-family home he or she intends to live in.
When the property is for commercial development, such as an office building or apartment building, then the court will still presume that money damages are inadequate (and therefore specific performance should be awarded), and the breaching seller will have the burden of proving to the court that money damages would in fact be adequate. While this leaves room for debate, as one appellate court has ruled, “Courts generally assume the uniqueness of land and grant specific performance after a breach of a land sale contract in both residential and commercial contexts, with little or no discussion of the adequacy of remedy issue.” What this means for buyers in the commercial context is that there is a high probability that a court will award specific performance in a real estate contract, even for commercial property purchased solely for investment.
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At Wagenseller Law Firm in downtown Los Angeles, our attorneys have extensive experience in resolving all types of real estate litigation matters. Contact Wagenseller Law Firm today to schedule a consultation to discuss your real estate matter.