Once an offer is properly accepted on a piece of real property and a deposit paid, that offer is a binding contract. The same is true after a purchase and sales agreement is finalized and signed between parties to a real estate transaction. If the Buyer were to refuse to move forward and purchase the property without a valid way to terminate the agreement, any deposit paid by the Buyer would typically be at risk as the Seller’s damages. But what happens if a Seller refuses to move forward? Say the market rapidly rises and they get an offer significantly higher than they had already agreed to sell the property for. Since the Seller hasn’t put any money down, what rights does a Buyer have?
As a matter of law, if a Seller refuses to sell a piece of real property that they have entered into a legally binding contract to sell, the Buyer of that property has the right to seek specific performance. Specific performance is a legal remedy which enables a Buyer to seek a court to force the Seller to convey the property to the Buyer per the terms of the Agreement.
In law, when a person breaches a contract, the typical remedy is monetary damages. A court will make a determination as to the monetary damages suffered by the non-breaching party that would make them whole as if the other party had performed their obligations. However, when it comes to real estate, the law views every piece of real property as unique. As a result, monetary damages are not adequate because you can’t award the Buyer a sum of money to buy another property that is the same as the one they agreed to purchase because there are no two identical properties. The only way a court can make a Buyer whole is to force a Seller to sell the exact property the Buyer had agreed to purchase.
Seeking specific performance is, however, not always cut and dry. It requires a Buyer to file a lawsuit, of which the Seller may have defenses to and whether or not it makes sense to seek specific performance in a particular situation depends on the specific facts of one’s unique situation and should be considered after careful consultation with a Buyer’s attorney.