What is Specific Performance in a Real Estate Contract?

The world of buying and selling real estate is one that few people enter more than one time. That’s something that can be the gateway to trouble if you’re in the market to purchase a home or you are putting your property up for sale. What many consumers fail to understand is the legal aspects of making a purchase offer or accepting one. The offer in itself is a legal document and that should be evident by its very appearance and its language.

There are many clauses in a real estate contract, just like practically any other legally binding agreement. For instance, all the contingencies that buyers typically insert are subject to stipulation by the seller. If the seller rejects the offer for any reason, the contract is essential void, but that certainly doesn’t mean the deal itself is dead.

Such contingencies include things like qualifying and securing financing, a home inspection, a pest inspection, and the valuation or appraisal all “signing off” on the deal. Sellers likewise can insert contingencies, like requiring buyers to pay all the closing costs. Those contingencies and the purchase offer itself are all subject to what’s known as specific performance.


The term isn’t ambiguous and goes directly to its meaning, which is, that the parties involved can be compelled by a civil court to follow through with their promise. It can be something quite particular, for instance, paying closing costs, or, it could be the actual purchase or sale.

“A real estate purchase agreement or contract of sale is a binding contract if it has been signed by the seller and the buyer and if the buyer has given the seller a deposit. The parties are obligated to meet the terms and conditions of the contract and to take the actions that they agreed to take in the contract. If either party fails to perform under the contract, the other party can obtain certain kinds of relief, called remedies. One remedy, called specific performance, requires the defaulting party to complete the contract.” —Lawyers.com

Basically, its a kind of guarantee the seller and buyer make good on their respective side of the deal. There have been courts which have ordered individuals to purchase a home, even though those people changed their minds. Conversely, the same has happened to sellers, being legally compelled to good through with the sale of their properties.

The very language in a purchase contract states that each party of the transaction is legally bound to the terms of the sales agreement. That should be surprising, but it doesn’t mean that it’s inevitable the sale go through in its current manifestation. There are ways out, depending on the situation and the motivation of the parties.


The position held by the law is that each parcel of property is unique, even if it is a townhome or a condo, and that a monetary away is not sufficient for a breach of contract. The courts treat a specific performance lawsuit in a way that would produce the same result if the transaction had successfully settled.

In plain English, this means that the law assumes that making the party who breached the agreement pay cash for their actions isn’t enough to make the other person whole. For instance, if the property in question is professionally valued by an appraisal and the contract sales price is the same, let’s say $500,000, courts won’t order the party who breached the agreement to pay the opposing party a half-million dollars in cash. Instead, the court will order the sale to go through for the agreed and bona fide price.

Another thing to understand about specific performance is that it is predicated on the fact the buyer and seller have made sufficient consideration and acceptance. In the legal world, the term “consideration” means money. That is to say, the buyer’s deposit or earnest money. Unfortunately for the parties involved, most courts will accept practically any amount of consideration to show good faith, even as little as a single dollar.

That being said, the contract must be legally sufficient and enforceable, which means it cannot contain terms which are not legal or cannot be met. In addition, there has to be a specific time and manner of payment. What’s more, the property must be able to be transferred without defects. This means clouds on a title make the property legally defective, which makes the contract unenforceable.

Each party must also act according to the terms of the contract as well. For example, if a buyer tenders a purchase offer and then misses the due date for the earnest money deposit but makes it after the specified date, he or she cannot use the specific performance clause to sue the seller in a court of law.