Specific Performance in Residential Real Estate

You've gone from open house to open house looking for the right place to call home. Just when it seemed like you would never find the right one, lightning struck. A perfect house or condo, in the right neighborhood and in a great school district to boot.

Elated, you submit your best offer and cross your fingers. Shortly thereafter, the phone rings, it’s your agent, the offer was accepted. You celebrate. You call your parents.

BUT … before you can sign the Purchase and Sale Agreement, the listing agent informs you that they received and accepted a higher offer and the deal is off. Shocked and angry, you think to yourself: “There’s no way they can do that. There must be some way to force the seller to honor the deal.” So, you pick up the phone and call your attorney; there’s hope! So-called “Offers” are fully-binding legal contracts in Massachusetts. What’s more, the normal remedy for buyers in your position is something called Specific Performance, where the court actually compels the Seller to carry out the agreement.

BUT … There is always a but. In order to win an action for specific performance, you must be able to demonstrate that the seller “materially breached” his or her obligations under the offer to purchase. Your lawyer then goes on to explain that, assuming the offer to purchase was properly signed by the appropriate parties, failure to honor said offer to purchase generally constitutes a material breach. Great! It sounds like you are on your way to getting that home after all.

BUT … Yet another but. Your attorney goes on to explain that, in practice, pursuing specific performance isn’t always the most practical solution. First, there is no such thing as a guarantee when you’re relying on a trial to enforce your rights. The seller may have defenses available that have the potential to sink your case for specific performance, the fact finder might believe an alternate set of facts, or the court could simply get it wrong. Next, since specific performance is what is called an equitable remedy, courts have wide discretion to implement them. Put differently, your expectation of what is fair and equitable may depart dramatically from what the court decides, and there isn’t much you can do about it. Finally, it is important for potential plaintiffs to consider the costs associated with litigation. You’ll usually be paying an attorney an hourly rate to seek out a specific performance remedy, which will generally entail both discovery and a trial: time-consuming stuff. The time-cost is another drawback in itself. While you’re battling it out in court, you’re potentially missing out on other properties that may have been suitable. It’s always worth asking whether you may be better served by walking away from the deal and investing your time and money into finding another property.

Please remember, all legal matters are unique and there is no one size fits all solution. If you find yourself in a similar situation to the one described above, you should consult an experienced attorney to help determine the best course of action for your individual needs.