Specific Performance Demands In Real Estate Transactions

Specific Performance Demands In Real Estate Transactions



Specific Performance Demands In Real Estate Transactions
Every so often, real estate transactions can go bad .​
This often results in​ one party demanding the​ other specifically perform pursuant to​ the​ real estate contract .​
Specific Performance Demands In Real Estate Transactions
Once a​ seller and​ buyer agree on a​ price for​ a​ property, a​ real estate contract is​ signed .​
The contract contains provisions each must comply with, provisions that are legally binding .​
If problems arise during escrow, particularly if​ things turn nasty, one party may look to​ legal remedies to​ force the​ other party to​ do something .​
Specific performance is​ a​ legal demand that a​ party perform some act .​
Although the​ theory can be applied to​ many situations, it​ is​ often seen in​ real estate transactions .​
This is​ because courts have determined that property is​ unique, and​ specific performance is​ often more valuable than monetary damages .​
In the​ case of​ real estate, specific performance demands often involve the​ conveyance of​ title .​
Having met the​ conditions of​ the​ contract, the​ buyer demands the​ seller convey title to​ them .​
Why would sellers not do this automatically? Situations can include seller remorse, basic flakiness or​ the​ realization the​ seller accepted far too low an​ offer compared to​ what the​ market would produce .​
Specific performance demands are a​ two sided situation .​
Courts often are reluctant to​ grant them because human nature is​ such that the​ defendant will often poison a​ situation by damaging the​ property or​ screwing up title .​
This does not mean the​ seller is​ off the​ hook .​
While courts are hesitant to​ grant specific performance demands, they are not hesitant to​ enforce real estate contracts .​
Depending upon the​ laws in​ your state, the​ court may grant something called a​ lis pendens .​
The lis pendens represents the​ equivalent of​ the​ monetary damages suffered by the​ buyer .​
More importantly, it​ is​ recorded against the​ deed of​ the​ seller’s property .​
This effectively forces the​ seller to​ pay the​ buyer if​ the​ seller ever hopes to​ sell the​ property .​
When a​ title insurance company reviews title for​ any subsequent sale, it​ will notify the​ new purchaser of​ the​ lis pendens and​ refuse to​ issue title insurance .​
With no title insurance, the​ seller is​ going to​ have an​ extremely hard time moving the​ property .​
In fact, it​ will be nearly impossible as​ it​ is​ difficult to​ imagine any buyer that would want to​ get involved in​ the​ dispute .​
While there can be sniping in​ real estate transactions, most go fairly smoothly .​
When they fall apart, specific performance and​ lis pendens can become dominant issues.




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