Most of the SP lawsuits that I am familiar with involved a buyer who entered into a purchase contract on very favorable terms or they planned to develop and could make a considerable profit on the property. In those instances, the buyer may spend less on the law suit than the profit they could make on the deal, thus justifying the time and expense. Additionally, nearly all real estate purchase contracts contain an attorney fees provision so if successful, they will likely recover their costs in the end (assuming the judgement is actually collectable). Absent those facts, most cases settle for $$ to avoid the risk and uncertainty of long and protracted litigation.
When you are in contract with a seller, they are obligated to sell to you. If they fail to sell to you they have breached the purchase contract and may be liable to you for breach of contract. Very importantly you may sue them, in such a case, for specific performance. Thus getting a Court Order forcing them to sell the property to you.
But what happens if the seller has already sold the property to another buyer who (let’s say) is even already currently residing in the property? I cannot imagine that a Court would reverse the sale that was in breach of your purchase contract, and instead order specific performance (that is, force the seller to sell the house to you). Obviously the house has already been sold to a buyer who is currently residing in the house,(albeit in breach of your contract). Or could the Court reverse that sale and order specific performance?
I imgagine that in such a case, you would only be able to sue seller for the difference between the market value of the house and your contract price, and any other relevant expenditures you may have incurred in reliance upon the purchase contract. Is this correct?
Any real life experience regarding this? Any comments, thoughts, opinions? Thanks.
Specific Performance is considered by the courts to be an “extraordinary remedy” in which you must have no adequate remedy at law. With residential real propery, courts have traditionally deemed such property as “unique” in order to provide a buyer no other remedy at law. In recent years, some courts have been deviating from this rule and awarding pure damages instead.
If a third party buys the property that you were trying to purchase, they must be a “B.F.P.” (bona-fide purchaser for value without notice). If the new purchaser was on notice of your prior contract and that there was a potential dispute, then a court “may” reverse the transaction. However, this is rare and you would have the burden to prove such knowledge.
In “real life,” specific performance suits rarely make it to trial. It is just too expensive. Most real property disputes are resolved in mediation or after most of the discovery is complete and the case can be properly assesed and settled.