Exploring Buyers’ Rights: Seeking Specific Performance of Real Estate Purchase Agreements

When two parties enter into a contract for the purchase and sale of real property, both parties intend to close on the sale of the property.  However, there are times where the seller refuses to sell the property to the buyer.  What happens then?  What rights does the buyer have to force the seller to close and to sell the property to the buyer?

This article seeks to explore these questions and evaluates the language in the most common forms of purchase and sale agreements.  In my most recent articles, I discussed the common forms of purchase and sale agreements in the context of disputes regarding binder deposits.  I specifically discussed the concept of an “interpleader action” and how a buyer may recover the binder deposit after the purchase fails.  These articles are as follows:

• What is an “interpleader action” after a failed real estate purchase? | Jimerson Birr (jimersonfirm.com)
• Help! How do I get my binder deposit back after a failed real estate purchase? | Jimerson Birr (jimersonfirm.com)

This article seeks to further explore what happens when the purchase of real property falls apart and examines the buyer’s remedy of specific performance.

What does “Specific Performance” mean?

When purchasing residential real property in Florida, the parties will enter into a written purchase and sale agreement.  Common forms of purchase and sale agreements include the following:

1. Purchase and Sale Agreement by the Northeast Florida Association of Realtors, Inc. (NEFAR)
2. Residential Contract for Sale and Purchase by the Florida Realtors and the Florida Bar
3. “As Is” Residential Contract for Sale and Purchase by the Florida Realtors and the Florida Bar

Regardless of the form agreement that is used, the purchase and sale agreement generally provides for the buyer to seek “specific performance.”  Specific performance is typically a buyer’s remedy in the event the seller refuses to sell the real property.  When the seller refuses to sell the property, the buyer may not have damages that would make the buyer whole.  Additionally, property is unique, and the buyer may love the property and only want the property.  Specific performance is a remedy that requires the seller to sell the real property to the buyer.

When a seller refuses to close on the sale of real property and refuses to sell the real property to the buyer, the buyer must look at the language in the purchase and sale agreement to evaluate the buyer’s options and remedies.  Each of the form agreements identified above provide specific performance as a buyer’s remedy.

In the NEFAR Purchase and Sale Agreement, specific performance is referenced in Section 10.  Section 10 states that when a seller defaults under the agreement, the buyer may either: (1) seek specific performance; or (2) elect to receive the return of buyer’s binder deposit(s) without thereby waiving any action for damages resulting from seller’s default.

In the Florida Realtors/Florida Bar Purchase and Sale Agreement (both the standard agreement and the “As Is” agreement), specific performance is referenced in Section 15.  Section 15 states that when a seller defaults under the agreement, the buyer may elect to receive return of buyer’s deposit without thereby waiving any action for damages resulting from seller’s breach and may seek to recover damages or seek specific performance.

How does specific performance work?

When a buyer wants to force the seller to sell the real property to the buyer, the buyer may file a lawsuit seeking specific performance.  The lawsuit begins with a complaint, which will allege the facts surrounding the seller’s failure to sell the property and request specific performance as the remedy.  Simply put, the complaint requests that the court force the seller to sell the real property to the buyer.

In response to the complaint, the seller may raise affirmative defenses.  One of the most common defenses raised is that the buyer breached the contract by failing to comply with all obligations of the buyer.  This may include failing to timely provide the binder deposit or failing to comply with the various other requirements and obligations under the purchase and sale agreement.  The buyer’s failure to comply with the purchase and sale agreement could prevent the buyer from being able to obtain specific performance.  As such, before filing a lawsuit seeking specific performance, the buyer should evaluate all facts and confirm that the buyer has not breached the purchase and sale agreement.

After the lawsuit is filed and the seller answers the complaint, the parties will generally engage in discovery, which allows the parties to fully develop the facts surrounding the parties’ positions.  Thereafter, the court will schedule a trial and make a decision on whether the seller must sell the property to the buyer. If the court agrees that the buyer has complied with his or her obligations under the purchase and sale agreement and is entitled to specific performance, then the court may order the seller to sell the property to the buyer.

Statute of Limitations

A lawsuit seeking specific performance must be brought within one year of the seller’s breach of the purchase and sale agreement.  §95.11(5)(a), Fla. Stat. (2023).  While the buyer has one year to seek specific performance, in practice, when a seller refuses to sell real property, the buyer generally files a lawsuit seeking specific performance soon after the seller’s refusal to sell the property.

Attorneys’ fees and costs

Whether the buyer or seller will be entitled to recover attorneys’ fees and costs in a lawsuit seeking specific performance will depend on the form of the purchase and sale agreement.  In the NEFAR Purchase and Sale Agreement, Section 12 provides that the buyer and seller will each be responsible for their own attorneys’ fees and costs.  On the other hand, Section 17 of the Florida Realtors/Florida Bar Purchase and Sale Agreement (both the standard agreement and the “As Is” agreement), provides that in any litigation permitted by the agreement, the prevailing party is entitled to recover its attorneys’ fees and costs.

Conclusion

There are many complexities surrounding failed real estate purchases, including whether the buyer can seek specific performance and force the seller to sell the real property to the buyer.  Given that there are different purchase and sale agreement forms, the parties need to understand the terms of the executed purchase and sale agreement and evaluate their options. It is important to hire an experienced real estate attorney who can help navigate the waters of these disputes.