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!