There is another alternative available: specific performance. This is considered to be an extraordinary remedy available through the New Jersey equity courts when money damages are insufficient to compensate the non-breaching party, in the court’s discretion. It is said that specific performance will be denied if its application would create a hardship to or impose an injustice on either party. Also, it may not be granted if there is a change in circumstances.
Where a seller refuses to convey title, the buyer may seek specific performance of the contract to compel the seller to close, so long as the contract is clear and enforceable, and as long as performance is not impossible. For instance, if it develops that the balances due on mortgages and other liens encumbering the seller’s title exceeds the purchase price, then the seller would be unable to perform and therefore the buyer would be limited to a lawsuit for money damages.
A seller may seek specific performance against a buyer, but there are caveats. If for example, the buyer’s contract contains a mortgage financing contingency, and the buyer obtains a mortgage commitment, but then the commitment expires and cannot be reinstated, specific performance will not be granted, on the ground of impossibility. However, if a buyer has an unexpired mortgage commitment and is able to comply with any stated conditions therein, or if the buyer has agreed to pay cash for the property, then specific performance may be granted. Again, the seller would need to show that money damages would be an insufficient remedy for the buyer’s breach of contract.
If your real estate transaction crashes and burns, you need to consult an experienced New Jersey real estate litigator to learn your rights and options. Call us today!
In that blog, I detailed the failure of a title settlement agent to satisfy the prior owner’s mortgage, with the result that the new owner was served with a foreclosure complaint.
Boundary line disputes are another common subject of title litigation. Suppose you obtain a property survey depicting your boundary lines prior to the closing of your real estate purchase.
You then proceed to install a fence inside the boundary line, carefully referring to your survey to locate it properly. Shortly thereafter, you receive a letter from your neighbor’s attorney advising that you placed the fence on the neighbor’s property and demanding its removal.
If you submitted your survey to your title insurer on or before closing, and if that survey was endorsed to the title policy, you should refer the neighbor’s claim letter to your title insurer which is likely to be obligated under the terms of the policy to provide you with a defense and indemnification. This is particularly true if the neighbor files a lawsuit against you.
It may be that your survey is wrong, or that the neighbor’s survey is wrong. Or that both surveys are wrong. If you are sued, the title company is likely to retain an expert surveyor on your behalf who will give an opinion as to where the boundary line actually is. This may involve review of public property records and conducting field work in and around your property. If it turns out that you placed the fence on the neighbor’s property, the title company may try to work out a compromise or an easement with the neighbor. If that is not possible, then the title company may pay to relocate your fence and to compensate you for the diminution in value of your property. Or provide you with legal counsel to defend the lawsuit through and including trial.
Again, these are further reasons to purchase title insurance when you buy real estate. And to promptly refer any claim to your title insurance company.
For all mortgage applicants after October 3, 2015, the Closing Disclosure form will answer many common questions and give protection as to essential terms. This five page document must be given to borrowers at least three days prior to closing. By comparing the Closing Disclosure to the Loan Estimate received by applicants when they applied for the mortgage, they can note any changes and avoid last minute surprises in a roomful of people at the closing.