Real estate contracts are different than almost any other type of contract because under the law, every piece of real estate is considered unique, and unique items have their own special type of remedy in contract law. Known as specific performance, in breaches of real estate contracts, the party injured by the breach can request that the court force the transaction to proceed because of the uniqueness of the property. If you are considering entering into a real estate contract, it is important that you understand the legal intricacies of specific performance and how it could affect your real estate dealings.
Remedies for Breaching a Real Estate Contract
There are multiple remedies for a breach in a real estate contract. One potential remedy is money damages, which can be awarded if the injured party has been financially damaged by the deal. Depending on the circumstances of the breach of contract, the injured party may only receive money damages for any deposit on the real estate plus reasonable expenses. However, if the breach was done in bad faith, the injured party could be awarded additional punitive damages for the contract.
Another remedy for a breach of contract in real estate is the termination of the contract and refund of deposit plus reasonable expenses. This remedy is typically awarded when the contract has not been formalized or is found to be unenforceable and invalid. The injured party is typically able to recover any investment made towards the completion of the contract for the real estate, plus expenses.
The final option for real estate contract breach is specific performance. If the seller of the real estate is unwilling to convey the property to the buyer, the buyer can ask the court to force the transaction to proceed according to the terms of the contract. Specific performance occurs in place of monetary damages for the breach, and the transaction for the property must go forward as stated in the contract, with no modifications or changes.
Elements of Specific Performance
In order for a court to order specific performance in a breach of contract for real estate, the following elements must be shown by the injured party:
- The unique real estate makes the contract eligible for specific performance
- Adequate consideration has been paid by the injured party for a reasonable contract
- Performance by the injured party on the agreement
- Breach by the other party through nonperformance or excuse, and
- An inadequacy in other remedies but for specific performance of the contract
If the injured party is successful in their case for specific performance, the court will order that the contract be performed according to its terms. This means that the sale must go through as agreed upon and the injured party is entitled to any rents or profits that he would have received if the property would have been conveyed when it was supposed to be transferred.