In most cases, a party initiates a civil lawsuit because it has been harmed and it seeks an award of money damages to compensate it for the harm it suffered. Sometimes, though, the type of harm that is caused by a breach of a contract cannot be corrected through an award of money damages, regardless of the amount. When that is the case, such as in disputes over parcels of real estate, the injured party may seek other remedies, like a court order demanding that the other party complete the performance promised in the contract. This is called specific performance, and it can be difficult to obtain unless your case meets a exact set of criteria. If you have been harmed by another party’s breach of a real estate contract, make sure you have skilled Atlanta real estate attorneys on your side to protect your interests.
One example of a specific performance case was a litigation action recently decided by the Court of Appeals. In the summer of 2016, a man named Rahmat entered into a contractual agreement to purchase a shopping mall plaza from a family limited partnership. The buyer paid earnest money and also paid for an environmental assessment. Furthermore, the buyer allegedly put up more than $450,000 of the property’s $525,000 sale price. After the two sides held a meeting to talk about “expenses related to the ownership and management of the property,” the seller abruptly canceled the contract.
The buyer sued for specific performance. Specific performance, if awarded by a court, means that a reluctant contractual party is ordered by the court to perform as it had promised within the underlying agreement. Specific performance is a rare outcome and requires the judge to determine that an award of money damages could not provide proper compensation to the party allegedly victimized by the breach of the contract. A plaintiff is more likely to obtain an order of specific performance in a real estate sale dispute than in many other types of litigation actions. That is because of the inherently unique nature of a parcel of real estate.
If you are involved in a dispute that you feel has demanded that you pursue a specific performance remedy, be aware that simply filing and pursuing your breach of contract action may not be enough. After all, the seller has refused to complete the sale, so the seller still owns the property, and you do not. What happens if the seller then decides to sell to someone else instead?
One way to minimize the risks of the harmful scenario outlined above coming to fruition is to file something called a notice of “lis pendens.” Lis pendens is a Latin phrase, and it means that a lawsuit is pending. A notice of lis pendens is filed with the clerk’s office and included in the county real estate records. The purpose of this notice is to inform potential buyers, lenders, or others about the ongoing litigation. In a practical sense, it can have the effect of motivating buyers or lenders to stay away. If a buyer closes a sale on a property that has a notice of lis pendens on it, and the plaintiff wins the lawsuit, the plaintiff receives the property, and the buyer gets only a potential cause of action in court against the seller.
In this case, the seller asked the judge to dismiss the case, and the judge did so. The appeals court revived the case. The contract called for the seller to receive $400,000 at closing and for the buyer to finance the remaining $125,000. The buyer alleged that he had put up more than $450,000. However, since the buyer neglected to include a trial transcript in his appeals paperwork, the appeals court did not have enough information and sent the case back to the trial court for an additional hearing.
Whether you are preparing to launch a commercial litigation action or defend against one, the experienced Atlanta real estate attorneys at Poole Huffman, LLC are here to help. Our attorneys have spent many years formulating and executing effective business litigation strategies to protect and enhance our clients’ interests. Contact our attorneys online or by calling (404) 373-4008 to schedule your confidential consultation.
More blog posts:
Property Investors Beware: “Self-Help” Evictions are Never an Option, Atlanta Business Litigation Attorneys Blog, June 18, 2015
Contract for Deed – Its Background and Purpose – Part 1 of 5, Atlanta Business Litigation Attorneys Blog, March 17, 2015