SPECIFIC PERFORMANCE

The second type of relief which a court can award for breach of some real estate contracts is specific performance, which means a court order requiring the parties to complete the contract.  Specific performance is governed by a series of laws set forth in California Civil Code Sections 3384 to 3395.

Specific performance will be awarded only when money damages are not adequate.  In real property contracts the law presumes that every piece of real property is unique so money damages, by definition, are not enough.  Civil Code Section 3387.  If the property is a single-family residence, which the buyer intends to occupy, then this presumption is conclusive; specific performance is always available.  With other kinds of real property, however, if the buyer intended to re-sell the property for a profit, then money damages may be adequate.

To obtain specific performance, the aggrieved party must get over a number of special hurdles.  First, the complaining party must have followed performed his or her side of the contract; if he or she has failed to perform, in any significant respect, he or she cannot get specific performance.  Civil Code Section 3392.

Second, a contract can be ordered specifically performed only if is terms are definite and certain.  Civil Code Section 3390(5).

Third, the contract must meet some high standards.  The consideration for the contract must be adequate, Civil Code Section 3391(1), the terms of the contract must be just and reasonable, Civil Code Section 3391(2), the consent of the breaching party must not have been obtained by misrepresentation, concealment or unfair practices, Civil Code Section 3391(3), nor can the contract have been made by mistake.  Civil Code Section 3391(4).

These special rules apply, because specific performance is an equitable remedy, not a legal remedy.  This means that the court has an unusual amount of discretion, and the judge may look at virtually any factors, which affect the underlying fairness of the transaction.

If an aggrieved party gets specific performance, he or she cannot also recover general money damages for lost profits; he or she must, at some point, choose between the two remedies.  A party can, however, obtain specific performance and consequential damages.

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