The term specific performance refers to literal performance of ones obligations under a contract. Thus, the law allows an aggrieved party to file a claim for specific performance, which requests the court to order the party breaching the contract to perform its obligations under that contract. 1 See Fla. Stat. Specific performance is the legal concept that anyone who signs a contract is bound to the terms of the contract. All of the TREC-promulgated purchase contract forms expressly provide the remedy of Specific Performance in their provisions related to “Default” (see below). Because most contract issues … One solution lies in the freedom to contract, where the seller could insert a clause in the sale contract that as a condition precedent to filing a suit for specific performance, the buyer would be required to deposit in an interest-bearing escrow account the full amount of the purchase price, plus a reasonable sum to reimburse the seller for attorneys’ fees and costs in the event the seller prevails. 2d 778 (Fla. 2d D.C.A. 1980). 12 Failure to disclose a known material fact to an opposing attorney or party in connection with the sale of land would violate Rule 4-8.4(c) of the Rules Regulating The Florida Bar (Rules of Professional Conduct), which prohibits a lawyer from engaging “in conduct involving dishonesty, fraud, deceit, or misrepresentation,” and may thus subject the attorney to Bar discipline. The court can issue an order compelling a party to comply with their contractual obligations – a good example being to complete building works on time. This column is submitted on behalf of the Real Property, Probate and Trust Law Section, Bruce M. Stone, chair, and Brian Sparks and William Sklar, editors. The issue in the suit for specific performance was whether the agreement to sell dated 15.05.1990 executed by defendant in favor of the plaintiff would be enforceable in … On the date of the scheduled closing, with no extension having been granted, the buyer informed the seller that it did not have the money and stated that it was “all over.” Later that day the buyer surprisingly informed the seller by fax that the “check is in the mail.” The buyer never sent the extension fee. Beware real property owners: The mere filing of a suit for specific performance (regardless of its ultimate success or the merits) can potentially tie up your property for several years, with or without the existence of a lis pendens. denied, 96 S.Ct. Suit for Specific Performance: Specific performance means the actual carrying out of the contract as agreed. Decree of specific performance is discretionary relief. The buyer, as was established at trial, had not been able to obtain financing and could not possibly have closed. 2d 383 (Fla. 3d D.C.A. On a motion to dissolve the lis pendens, the court ruled that the initial pleading did not show that the action was “founded on a duly recorded instrument” as required by statute to maintain the lis pendens, and that a bond would be required.1 The court dissolved the lis pendens after the buyer advised the court that it had no intention of posting a bond. All rights reserved. He received his B.A. Giving suit for specific performance is solely at the court's discretion, and the party can't demand it as their matter of right. §48.23 provides the procedures to be followed in obtaining a lis pendens. Specific performance is ordered only on equitable grounds in view of all the conditions surrounding the particular case. Although both buyer and seller retain the power to bring a specific performance claim if one believes the other to be in breach of the purchase and sale contract, the buyer has the power to tie up the seller’s property because, in most cases, the seller cannot sell the property once the buyer files a claim for specific performance. Sparks v. Charles Wayne Group, 568 So. Later, when a suit for specific performance was filed, the defendant objected to it, invoking Order 2 Rule 2, which states that the relief of specific performance … A contractual remedy, however, does not protect the unwary and unsophisticated seller. 2d 491 (Fla. 1993). Romance is an associate with Richman Greer Weil Brumbaugh Mirabito & Christensen, P.A., in Miami and West Palm Beach, where he concentrates in trial and appellate practice, specializing in commercial litigation including real estate litigation. When you sue for breach of contract, you can generally sue for money compensation. from St. Thomas University School of Law in 1994. This article discusses the legal and practical problems with representing a seller of property confronted with the possibility of being effectively “blackmailed” into settling frivolous claims for breach of a real estate sales contract. Evidence Act, 1872 – Section 101 – Burden of Proof – Suit for Specific Performance – Readiness and Willingness – How to succeed in a suit for specific performance – It is the plaintiff to prove that he was always been ready and willing to perform his part of contract and he should necessarily step into the witness box to give evidence. §48.23(3) provides that “[w]hen the initial pleading does not show that the action is founded on a duly recorded instrument or on a lien claimed under part I of chapter 713, the court may control and discharge the notice of lis pendens as the court may grant and dissolveinjunctions.” This provision was intended to have persons who place a lis pendens on property provide the same protections as a person obtaining an injunction. 2d 1238 (Fla. 1996) (where the Florida Supreme Court held that the economic loss rule does not bar a common law fraud in the inducement action.) Under contract, the buyer had the right to extend the closing date for three 30-day periods by paying a $25,000 “extension fee” by a specified date for each extension. At first blush, it would seem that a seller who has had a lis pendens dissolved while a specific performance suit is pending should simply be able to seek out an uninformed buyer and close the transaction without revealing to the buyer or the buyer’s attorney the pendency of the lawsuit for specific performance. The tenant responded with a counterclaim for specific performance that tied up the property for over a year even after a settlement agreement was reached requiring the tenant to leave the premises. In so doing, the seller must provide an alternative remedy for the buyer in the event of a default, such as a mechanism to determine the amount of damages if a court determines that seller breached the contract. Regardless of the appraisal of the merits of such claim, The Fund does not feel justified in buying possible litigation.”) 16 Wilson v. Sandstrom, 317 So. The practical reality is that once the lawsuit is filed, the property cannot then be sold to another buyer. Knowing of the existence of a specific performance suit, which could affect title, the seller’s attorney is ethically obligated to inform both the buyer’s attorney and the title company of the pendency of the suit.12 Thus, as a practical matter, the buyer becomes informed of the existence of the lawsuit; the buyer is deprived of bona fide without notice purchaser status, and the title company will not provide title insurance. Another issue arose whether, in absence of permission granted by the trial court at the time of withdrawing the previous suit in which permanent injunction was claimed, the plaintiff can file a fresh suit where specific performance will be claimed. While the buyer had little to lose other than its own expense of litigation, the seller was burdened with the risk of the down-turn of the market, the costs of litigation, the carrying costs of the property including substantial real estate taxes, and was left only with the prospect of obtaining a judgment for real estate taxes, attorneys’ fees, costs, and possibly slander of title or malicious prosecution, which would be wholly uncollectible unless the seller was able to pierce the corporate veil. Two recent unreported trial court decisions illustrate the point that a specific performance lawsuit can result in legal blackmail. One could argue that the seller, facing a spurious lawsuit for specific performance, could simply invoke the doctrine of caveat emptor and remain silent regarding the specific performance suit. degrees and past president of The Florida Bar. In one case, the buyer and seller entered into a purchase and sale contract for an unimproved parcel of property to be purchased in four phases for $12,000,000. It is virtually impossible to obtain title insurance necessary to convey title while an action for specific performance is pending. (2) Where an action for specific performance that does not comply with section (1) is filed, the court upon motion of defendant shall hold an immediate hearing where the claimant shall be required to both show cause why the requirements of section (1) have not been complied with and establish the likelihood of success on the merits of its claim. 1991). Understanding Specific Performance In the vast majority of civil suits, the plaintiff is seeking cash, known as monetary damages. Because of this dilemma, a third party is required to convey title to the successful buyer only when the third party is not a bona fide purchaser without notice of the claim. One solution lies in the freedom to contract, where the seller could insert a clause in the sale contract that as a condition precedent to filing a suit for specific performance, the buyer would be required to deposit in an interest-bearing escrow account the full amount of the purchase price, plus a reasonable sum to reimburse the seller for attorneys’ fees and costs in the event the seller prevails. The theory is that there're many buyers for a given property, but there may be only one "dream home" for a buyer. Mark A. Orders for specific performance come about after two parties have contracted with one another but one party has failed or refuses to perform as agreed in the contract. 1986). This misconception is perpetuated by timeshare companies and user groups that are funded, maintained and controlled by the timeshare industry. (3) When the initial pleading does not show that the action is founded on a duly recorded instrument or on a lien claimed under part I of chapter 713, the court may control and discharge the notice of lis pendens as the court may grant and dissolve injunctions. No title defect would appear of record, so the seller should then be able to find a buyer without knowledge of the pending specific performance claim. Hence you won't get a judge to … 1984). In the typical case in which a lis pendens is based on a claim for specific performance of a real estate contract, there is no duly recorded instrument already clouding title because the contract is rarely recorded. After waiting three days for the check that never arrived, the seller relied on the time is of the essence clause, defaulted the buyer, and terminated the contract. In today’s day and age, the marketability of any parcel of property depends on the buyer’s ability to obtain title insurance. 5 R.P.M. A common misconception is that title to property is not clouded by the filing of a lawsuit unless it is accompanied by a lis pendens.7 The fiction is that a lis pendens is necessary to give notice to the world of the existence of a suit.8 Many serious legal battles involve trying to dissolve a lis pendens or to force the party filing the lis pendens to post a substantial bond.9 The lis pendens statute requires a claimant to post a bond when the lis pendens places a cloud on title that did not previously exist.10 It would seem to follow that once having succeeded in dissolving a lis pendens, the property owner then should be free to convey title. These remedies include filing a lawsuit to collect damages or seeking a court order requiring the infringing party to live up to their obligations. He is president of Richman Greer Weil Brumbaugh Mirabito & Christensen, P.A., with offices in West Palm Beach and Miami, where his practice is complex commercial litigation, such as contracts, securities, antitrust, real estate, class actions, civil fraud, RICO, and other business torts. 7 Fla. Stat. Alternatively, suits for specific performance compelling someone to SELL their property can be successful. The seller again faced the prospect of a drastic downturn in the market, had lost a year and a half of rent, and had to absorb the real estate taxes and utility bills. 1982). While the trial court thus ultimately ruled in favor of the seller, the property was, in fact, tied up for almost two years, and, had the appellate process run its full course, could have been tied up for as long as two to three years or longer. The appeals process can add an additional year or more to resolve a claim. Specific per… These two cases are not extraordinary situations. The seller, nonetheless, could not obtain title insurance to sell the property to a third party until the lawsuit was over. Where an agreement for the purchase of real property does not specify the character of title, the seller is required to furnish good and marketable title. Aside from being unethical, such conduct may also expose the attorney to liability to the buyer in tort for fraud or misrepresentation. Alternatively, greater responsibility must be placed upon the seller’s attorney to include provisions in the contract to protect the seller. However, as set forth below, such an occurrence is highly unlikely. As one might expect, the buyer was a shell corporation with a substantial amount of debts and little in the way of assets. See HTP, Ltd. v. Lineas Aereas Costariccenses, S.A., 685 So. ‘To inculcate in its members the principles of duty and service to the public, to improve the administration of justice, and to advance the science of jurisprudence.’ In a suit for specific performance, when there are conflicting rights of parties namely, that of the agreement holder and the subsequent purchaser, what relief, the agreement holder should seek, apart from the relief of specific performance of sale agreement? 1989). Even where a contract to purchase specifically provides that a good and marketable title of record is not required, the seller’s failure to disclose the pendency of a known claim to title may subject the seller to liability in tort. 15 See, e.g., Lawyers’ Title Guaranty Fund, Title Notes, §10.05.01 (“Based on the Fund’s insuring and claim experience since its creation, a definite general policy has been established against approving policies in any case where The Fund or Fund Agent has actual knowledge of a definite adverse claim, even though it is not of record. Given the fact that not all sellers, particularly in residential sales, have the services of experienced and competent attorneys, the best answer lies in fairly drawn remedial legislation since the doctrine of caveat venditor is not sufficient. If the buyer is successful in its specific performance claim, the court typically orders the seller to convey title in accordance with the terms of the contract. Buyer’s Suing for Specific Performance The buyer may pursue specific performance if the seller is unwilling to carry out his or her obligations under the contract. 9 Fla. Stat. (1) No action for specific performance of a real estate contract may be maintained against an owner of real property unless: There's no one fix to all performance problems. Specific performance is best described as the breaching party's court-ordered performance of duty under the contract. 11 Arguably, a claim for fraudulent inducement lies just as where a broker fails to disclose a material fact as to the physi cal condition of the property. From Key Media, the world’s #1 global mortgage business publisher. 17 Terex Trailer Corp. v. McIlwain, 579 So. 2d 237 (Fla. 1st D.C.A. The claim is thus merely based on an unrecorded contract, and a bond is required to protect the landowner from damages resulting from the new cloud on title. While a lis pendens is simply a notice of pending litigation, the effect thereof on the owner of property is to constrain its right to convey title.) from George Washington University in 1990 and his J.D. The answer lies in creating a fair balance between the important right of a real estate buyer who has been the victim of a breach of contract to have access to the courts without that right of access being unreasonably chilled, and the right of a seller to be protected against a cloud for specific performance being placed upon the property by a buyer who merely alleges the elements of a specific performance suit but has few real facts to support it. In fact, most timeshare companies maintain that their contracts are non – cancellable. In fact, it is more likely than not that a lis pendens is not maintained on a property throughout the course of a specific performance lawsuit. The FHA 203k loan program provides home buyers the opportunity to buy and fix up a property, without exhausting their personal savings. Remedy of specific performance which is affected in case of breach of contracts is provided by the equity courts. The law as it exists today affords an unable buyer the power to force the unwary seller to settle a frivolous claim. A suit for specific performance can be filed by any party, in a court of competent jurisdiction, who has suffered loss due to non-performance of contract on part of the other party to the contract. Should a party default on his obligation, a court may issue an order for specific performance, requiring a party to perform a particular action. This conduct can be characterized as “legal blackmail.”. In response to the seller’s motion for summary judgment, the buyer claimed that the seller’s patterns of accepting late payments, albeit as an accommodation to the buyer, created a waiver of the “time is of the essence” clause.2 The court ruled that factual issues existed and denied seller’s motion for summary judgment.3 During a 12-day bench trial that was concluded more than a year and a half later, the seller established that a representative of the buyer had threatened to “tie the property up for three years” if the seller would not withdraw its default. Alternatively, the law could provide that the seller be entitled to an immediate hearing, at which time the plaintiff/buyer would be required, under the standards for injunctive relief, to establish the likelihood that the buyer would prevail on the merits. 6 Hollywood Mall, Inc. v. Capozzi, 545 So. To explore t… Hence, the statement of a cause of action in a suit for specific performance calls for two kinds of allegations: those that establish the right to recover for breach of contract, as well as those that are … 44 Fla. Jur. Specific Performance is mostly sought in case of a breach of contract resulting in damages or losses for one of the parties to the contract. What Does Specific Performance Mean? Specific Performance asks the court to force the opposing party … However, in some circumstances you can sue for “specific performance,” which means the judge orders the seller to actually go through with the contract and transfer the property to you. Specific performance is an alternative to a courts decision to award damages and it is commonly used as injunctive relief in cases involving real property or the disclosure of confidential information. In fact, the Florida Supreme Court stated that the bond requirement contained in the lis pendens statute exists merely to permit property holders to protect themselves from irreparable harm. Is what can sellers reasonably do to protect themselves, and what possible legislative remedies are there for what is clearly an inequitable situation that easily lends itself to egregious abuse. While it is true that a timeshare contract is a binding legal document, it is often mistakenly thought that such a contract cannot only be cancelled. That, however, is not likely to be the case because the buyer, to be secure in title (meaning superior to all others), must be a bona fide purchaser without notice of the pending action and the possibility that the seller may be obligated, through the loss of a specific performance suit, to convey title to another earlier contracting party. 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