What is Specific Performance in Real Estate?

When one party in a real estate contract fails to complete their obligations under the contract, the non-breaching party may file a specific performance action—a legal request asking the court to legally compel the other party to perform exactly as promised in the sale agreement. In real estate transactions, this usually means forcing the seller to transfer the property or requiring the buyer to complete the purchase when money damages or monetary damages are not an adequate remedy. Because real property is considered unique, courts often view specific performance as an appropriate equitable remedy when a valid and enforceable contract exists and the aggrieved party can show they were ready, willing, and able to complete the transaction in good faith.

A specific performance action usually arises when one party refuses to perform, such as a seller who declines to sell after signing the sale agreement, or a buyer who refuses to pay the purchase price even after all closing documents are ready. The trial court reviews the initial agreement, the essential terms, and whether the contract is a valid and enforceable contract supported by adequate consideration.

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When Courts Grant Specific Performance

A court may grant specific performance when:

• The contract is clear, definite, and enforceable.

• The non-breaching party has fulfilled or is ready, willing, and able to fulfill their obligations.

• Money damages would not provide an adequate remedy.

• There is convincing evidence that the agreement was made in good faith.

When these elements are met, the court reasoned that forcing performance ensures fairness and upholds the essential terms of the real estate contract.

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The Role of Specific Performance in Real Estate Transactions

In most real estate transactions, both parties enter into a purchase and sale agreement that outlines their obligations, such as the purchase price, closing date, and delivery of closing documents. When one party fails to perform, the other party can pursue the remedy of specific performance to enforce the contract.

This remedy is most common in real estate matters involving:

• A seller backing out of a sale after receiving a higher offer.

• A buyer refusing to complete payment even though financing was approved.

• A party claiming the agreement is invalid despite adequate consideration and mutual good faith.

Because real property is unique, a successful specific performance action ensures the non-breaching party receives the exact property they bargained for—not just its monetary equivalent.

Equitable Remedies vs. Legal Remedies

Specific performance belongs to the category of equitable remedies, which focus on fairness and actual performance, while money damages fall under legal remedies aimed at financial compensation.
In real estate, the court often finds money to be an inadequate remedy because each parcel of land has distinct circumstances, value, and characteristics.

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Requirements for a Valid and Enforceable Contract

A specific performance action can only succeed if there is a valid and enforceable contract. The party seeking to enforce the contract must prove several essential terms were established and met.

Essential Elements Include:

1. Adequate Consideration – Each party must have provided something of value, such as a purchase price or promise to sell.

2. Definite and Certain Terms – The agreement must clearly define the property, price, and closing date.

3. Mutuality of Obligation – Both buyer and seller must be bound to perform.

4. Written Agreement – Under the Statute of Frauds, all real estate contracts must be in writing and signed by both parties.

5. Good Faith Performance – The non-breaching party must act honestly and demonstrate they were ready, willing, and able to complete the transaction.

The court reviews convincing evidence—such as the initial agreement, earnest money deposit, and communications between the parties—to ensure the contract was entered into voluntarily and without fraud or coercion.

Why Enforceability Matters

Without a valid and enforceable contract, a court cannot order specific performance. Even if one party breaches, the court must find that all essential terms are clear and that both parties had the capacity and intention to perform the obligations under the contract.

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How a Specific Performance Action Works

A specific performance action is filed in trial court by the aggrieved party—usually the buyer or seller seeking to enforce** the real estate contract. This legal process asks the court to order the other party to complete the performance required under the agreement.

Steps in a Typical Specific Performance Case

1. Filing the Claim – The non-breaching party files a complaint with the court, stating the facts of the contract, the breach, and the relief sought.

2. Proving the Contract – The plaintiff must prove that a valid and enforceable contract exists with essential terms like the purchase price, closing date, and property description.

3. Demonstrating Performance – The plaintiff must show they have performed, or were ready, willing, and able to complete performance on their part (for example, obtaining financing or preparing closing documents).

4. Court Evaluation – The court reviews whether money damages are inadequate and whether the circumstances justify granting specific performance.

5. Order of Specific Performance – If successful, the court issues an order specific performance, legally requiring the breaching party to perform their obligations—such as transferring title, signing the closing documents, or delivering possession of the property.

When Courts Deny Specific Performance

Courts may deny this equitable remedy when:

• The contract lacks adequate consideration.

• The plaintiff acted in bad faith or caused the breach.

• The defendant can show performance was impossible due to unforeseen circumstances.

• The agreement was not sufficiently definite in its terms.

In such cases, the court may instead award monetary damages or allow recovery of earnest money as a legal remedy.
5. How Courts Determine Whether to Grant Specific Performance

When deciding whether to grant specific performance, courts analyze both the law and the facts surrounding the real estate transaction. The court reasoned decisions typically focus on fairness, feasibility, and whether a legal remedy—such as money damages—would be adequate.

Key Factors Courts Consider

1. Existence of an Enforceable Contract: The court first verifies that the agreement is a valid and enforceable contract with clearly defined essential terms like the purchase price, closing date, and property description.

2. Performance by the Non-Breaching Party: The party requesting relief must demonstrate they have performed, or were ready, willing, and able to perform, their obligations under the contract.

3. Good Faith and Fair Dealing: Courts will deny relief if the party seeking enforcement acted in bad faith or misled the other party during the transaction.

4. Adequacy of Legal Remedies: The court determines whether money damages are insufficient to make the aggrieved party whole. In real property cases, money often fails to substitute the unique value of the property.

5. Feasibility of Enforcement: The court ensures that the order specific performance can realistically be carried out—meaning the property still exists and the breaching party can fulfill their obligations.

The Court’s Reasoning in Practice

When issuing an order specific performance, the trial court often cites the principle that real estate is inherently unique, making monetary damages an inadequate remedy. Thus, forcing the breaching party to complete performance aligns with equity and ensures fairness to the non-breaching party.

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Examples of Specific Performance in Real Estate

To better understand how specific performance operates in practice, consider a few real-world examples of real estate transactions where courts applied this equitable remedy.

Example 1: Seller Refuses to Close the Sale

A seller entered into a real estate contract agreeing to sell a property for a fixed purchase price. After signing the initial agreement, the seller received a higher offer from another buyer and attempted to back out. The original buyer, having secured financing and deposited earnest money, filed a specific performance action.

• The court reasoned that the buyer had met all contract’s terms and was ready, willing, and able to perform.

• Since the real property was unique and the buyer had acted in good faith, the court issued an order specific performance compelling the seller to complete the sale.

Example 2: Buyer Defaults but Seller Seeks Enforcement

A buyer signed a sale agreement but failed to secure financing by the closing date. The seller later discovered that the buyer had sufficient payment capacity and withdrew without cause. The seller, claiming to be the aggrieved party, sought specific performance.

• The court reviewed the circumstances and found the buyer had breached the agreement without justification.

• The court allowed the seller to demand full performance and ordered the buyer to complete the purchase at the agreed price.

Example 3: Ambiguous Contract Leads to Denial

A purchaser filed for specific performance based on a contract missing critical essential terms, such as the closing date and method of payment. The trial court denied the remedy, ruling that the agreement lacked clarity and could not be enforced. The court reasoned that an order specific performance requires convincing evidence of a definite, legally enforceable contract.

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Specific Performance vs. Money Damages

When a breach occurs in real estate contracts, the non-breaching party typically has two main options: pursue money damages or seek the remedy of specific performance. The difference lies in the type of relief each provides.

Money Damages: A Legal Remedy

• Money damages compensate the aggrieved party for financial losses caused by the breach.

• This may include lost profits, appraisal value differences, or expenses tied to the failed transaction.

• It is appropriate when the property can easily be replaced or when specific performance is impractical.

Specific Performance: An Equitable Remedy

• Specific performance requires the breaching party to perform their obligations exactly as agreed.

• It is used when money cannot adequately replace the property or when each party’s performance is essential to fairness.

• Courts grant this equitable remedy only when the non-breaching party can prove they upheld their part of the agreement in good faith.

When Each Remedy Applies

Scenario

Best Remedy

Reason

Property has unique characteristics (e.g., location, zoning, or historic value)

Specific Performance

Money damages inadequate

Breaching party fails to deliver possession after receiving full payment

Specific Performance

Ensures actual transfer

Buyer loses out on a comparable property due to breach

Money Damages

Comparable property may exist

Contract too vague or indefinite

Money Damages

Specific performance impossible

The court’s decision hinges on whether forcing performance will ensure fairness or create unnecessary hardship.

If you’re preparing for a real estate transaction as a buyer or seller, understanding how contracts are enforced is only part of protecting yourself. For guidance on navigating the local housing market, comparing properties, and making a confident purchase decision, be sure to explore the latest insights on Western New York real estate and home buying, where you’ll find practical tips that go beyond the legal side of the deal.