Specific Performance of Real Estate Contracts

By Robert Nislick

You have been searching endlessly for that perfect new home. After spending countless weekends attending open houses, and hours visiting properties with your broker, you have finally found the right place. You are a solid buyer and you have made a very strong offer.

The seller agrees and accepts your offer. He signs it and his broker sends it back. YES!!! Everything is looking good.

Until, . . . no, . . . wait, . . . what, . . . no, . . . how could this be?

The seller has just changed his mind. Another buyer made a higher offer only twenty minutes after the seller said yes to you. You have learned that your deal is now off.

This is infuriating. You want to buy the property at the agreed upon price. You feel it is wrong for the seller to back out. As a matter of principle, you are willing to fight to buy this property, and you want stand up to the seller’s unvarnished greed.

What can you do? There is a good chance that when you made your offer, you used the Greater Boston Real Estate Board Offer to Purchase Real Estate pre-printed form. The Offer To Purchase describes the property to be sold and the price to be paid. It states further that the parties shall “execute the applicable Standard Form Purchase and Sale Agreement recommended by the Greater Boston Real Estate Board or any form substantially similar thereto, which, when executed, shall be the agreement between the parties hereto.”

It is highly likely that under the bellwether case McCarthy v. Tobin, 429 Mass. 84 (1999), the buyer and seller have a binding contract, and the seller’s acceptance of the buyer’s offer binds the seller to sell and the buyer to buy the property. “If . . . the parties have agreed upon all material terms, it may be inferred that the purpose of a final document which the parties agree to execute is to serve as a polished memorandum of an already binding contract.” McCarthy v. Tobin, 429 Mass. 84, 87 (1999), quoting Goren v. Royal Invs., Inc., 25 Mass. App. Ct. 137, 140 (1987). This means that the execution of a purchase and sale agreement is not necessary to bind the parties, but nevertheless, its execution is required by the offer to purchase. See id. at 88.

An aggrieved buyer may consider filing a complaint which seeks the remedy of specific performance. The buyer essentially asks the court to order the seller to sell the house, condominium unit, or land, at the already agreed upon price. “A judge generally has considerable discretion with respect to granting specific performance, but it is usually granted in disputes involving the conveyance of land. Raynor v. Russell, 353 Mass. 366, 367 (1967), and cases cited. ‘It is well-settled law in this Commonwealth that real property is unique and that money damages will often be inadequate to redress a deprivation of an interest in land.’ Greenfield Country Estates Tenants Ass’n, Inc. v. Deep, 423 Mass. 81, 88 (1996).” McCarthy, 429 Mass. at 89.

The buyer will probably also want to obtain a lis pendens against the seller’s property, and this should have the practical effect of deterring any other potential buyer from purchasing the property.

The aggrieved buyer should recognize that while McCarthy is established law which has been followed consistently by Massachusetts courts, no one’s case is a slam dunk. The seller may have legitimate reasons not to capitulate to the buyer’s demands. For example, the seller may have valid affirmative defenses to a claim for specific performance based on unfair conduct, misrepresentation, or fraud by the buyer. “As to the claim for specific performance, it is axiomatic that one must have behaved equitably in order to obtain equitable remedies.” Galipault v. Wash Rock Invs., 65 Mass. App. Ct. 73, 85 (2005).

Any buyer and any seller in a similar situation should seek the advice of experienced counsel. Based on the particularities of any given situation, I might advise my client to fight, or alternatively to re-negotiate, or simply to fulfill a clear and unambiguous contractual obligation.

Contact Massachusetts Real Estate Lawyer Robert Nislick directly, or ask your broker, or your transactional attorney to contact me to discuss the best options for you.