It happens more often that one might think: The owner of a commercial real estate tract or parcel enters into a contract with a prospective buyer and the owner gets cold feet. Perhaps the owner realizes that the prospective buyer is getting the better side of the bargain. Perhaps the owner decides that it can best utilize the property for its own purposes. Can the owner take the advice of the classic 1967 song by The Left Banke: “Just Walk Away (Renee)?” If the owner does so, what can the shunned purchaser do?

“I’ll Sue, I’ll Sue”

In this litigious world, the quick retort of the jilted purchaser might be, “I’ll sue, I’ll sue.” Yet another legitimate question is, "Sue for what?” The purchaser wanted the tract or parcel of real estate, not a lawsuit.

Aggrieved Party Ordinarily Has Responsibility to Minimize its Damages

Within the American system of laws, an aggrieved party to a contract indeed can generally sue to recover the damages caused by the other party’s breach, but the aggrieved party may not merely sit back and watch the damages accumulate; it must mitigate them. For example, if two parties agree to the purchase and sale of 1,000 bushels of wheat at a specific price and the seller refuses to move forward with the sale, prospective buyer must mitigate its damages by completing the purchase with some other party. If the purchaser has to pay more to secure the 1,000 bushels of wheat, it can recover the difference in a civil action against the original seller.

Wheat is Wheat; Real Estate is Unique

American law, in general – and California law, specifically – recognizes that while wheat is wheat, one parcel of real estate is not like any other; real estate is considered unique. Under the law, no two parcels are considered exactly the same, even if they adjoin. If a shunned buyer is to be made whole, it generally cannot accomplish its original goals by merely buying another tract of real estate. The legal system, therefore, has crafted a special remedy that may, under appropriate circumstances, be used: Specific performance.

Specific Performance

Since each parcel or tract of real estate is unique, the only way an aggrieved purchaser can be made whole is to fulfill the terms of the original contract. Accordingly, California law (and the law of virtually every other state) provides a special remedy: Specific performance. Following a hearing or trial, a court orders the owner to deliver a valid deed to the buyer (upon the payment of the agreed sales price).

 

Note that specific performance only applies in an action against the seller in a breach of contract action. California courts ordinarily are resistant to the specific performance argument unless money damages are incapable of providing relief. Since sellers generally receive money in the purchase and sale transaction, specific performance is rarely ordered against a defaulting purchaser.

Breach of Real Estate Contract Involves Complex Legal Issues

Any alleged breach of a real estate contract can involve one or more complex legal issues. Having experienced, aggressive legal counsel on your side can be crucial to protect your interests, whether you are an aggrieved buyer or seller. For many years now, CKB VIENNA LLP has represented landowners, leaseholders, property owners, and others in all sorts of disputes related to California real estate. Our team understands the complexity of the issues and stands ready to represent you aggressively. We have offices in Rancho Cucamonga, San Bernardino, and Los Angeles. Contact us by telephone at 909.980.1040 or complete our online form.

Comment