Specific Performance in Property Disputes

Specific Performance in Property Disputes

The legal remedy of specific performance is available to claimants making breach of contract claims. As the name suggests, a court order for specific performance is an order compelling the party in breach of contract to perform a certain contractual obligation. Specific performance will usually only be ordered where an alternative remedy, such as damages, is either unavailable or inappropriate.

Specific performance can often arise property disputes, where a defendant can be ordered to transfer a specific parcel of land or property right that he has contracted to sell, or can be ordered to complete on the purchase of a property that he has contracted to buy (so as to enable the seller in turn to complete their new purchase). One rationale for the prevalence of the remedy in property disputes is that, as no two pieces of land are the same, financial compensation may be inadequate for a claimant who faces losing a specific piece of land. It follows that a different approach can be taken by the courts where the innocent party entered into the property transaction as an investment; if the purpose of the transaction is solely profit, then damages is a more likely remedy.

Criteria for specific performance

Specific performance is an equitable remedy; the court’s discretion will invariably come into play and it cannot be said that there are any factual circumstances in which the making of a specific order is guaranteed. However what claimants need to show to obtain an order is summarised below.

In making an order for specific performance there has to have been a valid legal contract which has been breached by one of the parties. Once this is established and it has been determined that damages would be an inadequate remedy for the breach, the courts will look at numerous other factors including whether:

  • the claimant has made any attempt to mitigate his loss;
  • an order for specific performance would cause hardship and will ultimately be an injustice to the defendant (although this argument is only available in rare circumstances); and
  • the remedy is physically possible; for example, if the defendant is the contracted purchaser of the property and does not have the funds to complete the transaction, the court will be slow to order specific performance of something that is not possible to do.

Note however that the above criteria cannot be considered conclusive and other factors, such as the needs of the innocent party, may also be taken into consideration. For example, whilst it might be physically impossible for a contracted purchaser to complete a transaction due to lack of funds, the vendor may still (where specific performance is the appropriate remedy) obtain an order for specific performance and hold a charge over the property pending a later sale.

Difficulties enforcing orders for specific performance

A difficulty with specific performance orders is that they can be problematic to enforce or sanction. Whilst it is theoretically possible to imprison a defendant for failing to comply with such an order, prison is, in reality, unlikely. This can weigh on the courts and can prevent orders for specific performance being made in the first place.

South Bank Legal is a London commercial and dispute resolution law firm providing advice and representation in breach of contract claims and property disputes. For a confidential no obligation discussion about any the issues discussed above, please contact us.