What do I do if the real estate contract was breached? How does litigation work?

Question: We made an offer on a home which was accepted. We were thrilled, because we thought the price was too good to be true. Apparently, seller thinks the same thing! He’s refused to actually sell us the property, even though we had a signed contract of sals, had passed all the contingencies, had financing, and were just days from closing. I know we can get our deposit back and I’m pretty sure we could sue him for our out-of-pocket cost from his breaching the contract, but we want the house! Can we make him sell it to us?

Response: Possibly. There is a legal remedy called “specific performance.” That’s when a court orders someone to do something (to perform a specific action, if that helps you remember it), rather than “just” pay monetary damages. (Technically, specific performance is an “equitable” remedy, rather than a remedy “at law,” but that’s a largely meaningless distinction—most courts in the U.S. have access to both remedies.)

Generally, U.S. jurisprudence frowns on specific performance for two reasons. First, one of the underlying principals of American law is that money can compensate for most things—that’s why someone badly injured by medical malpractice or in a car accident can receive cash for their “pain and suffering.” Second, there’s a strong sentiment against forcing people to do certain things or act in certain ways—it smacks of indentured servitude or slavery.

However, land is different. Property is special in American law. Every piece of property is seen is unique—if you wanted to buy that parcel of land, this other parcel somewhere else isn’t seen as a reasonable substitute, nor typically is cash. Contracts to sell land are one of the few places where courts will enforce specific performance, so if you have met all your obligations and contingencies and you stand ready to close the sale, a court may order seller to sell you the land. It’s worth a try, since even if you fail, you’ll still be able to collect your monetary damages.

Sometimes, even when a court doesn’t explicitly order a sale, a law suit implicitly forces it. That’s because if you bring a lawsuit about land, your attorney can file a notice of lis pendens, which is a notice that there’s legal action affecting title to the property. If that notice is properly filed, it may make the property essentially unsellable, since the question raised by the legal action and the notice would prevent the seller from transferring clean title to someone else. If he intends to stay in the property, that may not matter; but if he was hoping to sell to someone else or for more money, the inability to transfer title may convince him to go through with the original sale to you.

Answered by Steven Zweig

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