Specific Performance Attorney – Orange County CA

Specific performance in Real Estate | Image of For Sale sign in front of a houseSpecific Performance is a remedy that a buyer can use to pressure a seller to follow through with a signed real estate deal, or even collect money damages in some cases. Edwin Fahlen can help you solve your legal matters that involve a breach of real estate contract.

When a seller tries to back out – of a real estate contract, and the buyer still wants to buy the property, the buyer can file a lawsuit or an arbitration request to seek a ‘specific performance’ ruling. The court or arbitrator can force the seller to sell. While the case is being adjudicated, the buyer, if adequately advised by a real estate attorney, will almost always file a lis pendens notice with the county recorder’s office against the property’s title, letting other potential buyers, or secret 2nd buyers, come to learn that the property’s title is clouded to the extent that the title could be forcibly changed by the arbitrator or judge at any time.

Buyer’s Breach of Real Estate Contract Remedy

The lis pendens and by extension the now ‘clouded title’ – renders the property virtually unsellable. If the buyer has a legitimate case, the seller could be forced to follow-through and sell the property to the buyer and pay the buyer’s legal fees.

Buyer can Sue Seller for Money Damages or Specific Performance

FICTICIOUS EXAMPLE: Ron and Maya located a spectacular property on a golf course in Yorba Linda, CA. Though the properties’ kitchen and bathrooms were a bit ‘dated,’ they thought that the home that was listed at $699,000 could easily sell for as high as $750,000 with some deep cleaning given the right buyer. They offered $650,000 which was accepted by the seller. Escrow was opened, but the seller realized the potential that Ron and Maya saw. The seller figured he didn’t make the best possible deal and refused to submit the deed to escrow to close the sale.

MONEY DAMAGES – Ron and Maya could sue – and if able to prove that the fair market value of the house is, say $740,000, could conceivably get a money judgment for $90,000 — the difference between the contract amount of $650K and the fair market value of $740K.

SPECIFIC PERFORMANCE – Sue the seller to ‘perform’ and complete the sale – In most Orange County Breach of Sale escrow transactions, the buyer makes a good deal and the seller, having sellers’ remorse, attempts to back out of the deal. This is often brought on when new offers appear during the escrow that are considerably more money, better terms, all cash, no contingencies or something “better.” Usually, buyers caught up with a back-peddling seller aren’t looking to sue the reluctant seller for money damages — they just want the deal that was agreed to. The buyers want their new house!

In these typical cases gone bad, the buyers can hire a real estate attorney and sue for “specific performance” of the contract to: (1) follow through; (2) to make good on the deal; by (3) transferring ‘clear title’ to the buyer. If the buyer obtains a court judgment ordering the seller to perform by closing the escrow, and the seller still refuses to submit his deed, the judge in the case can appoint the Clerk of the court to sign the deed on the seller’s behalf and the escrow will close and the buyer will get title to their new property.

Filing a Specific Performance Lawsuit Takes Time – Doesn’t It?

In fast paced real estate sales, often by the time the buyer becomes aware that the seller is attempting to force them out and replace them with a buyer offering more money, or the seller is ignoring the current buyer and pretending like there isn’t a signed contract and raises the sales price; has new open houses and is obviously doing an end run around the buyer, how can the current legal buyer (with a legitimate contract) prevent the seller from selling the house to someone else? Call a Real Estate Lawyer!

You might think that your escrow officer, who you trust, – will inform you if another sale with another buyer was happening, but a shrewd seller can simply open a second escrow at another escrow company and sell the house out from under you!

lis pendens- Latin Words to Stop a Conniving Seller

You stop the seller who is in breach of contract with the buyer – by filing a civil lawsuit and recording a lis pendens — which is a “notice of pending action” which is a HUGE MONKEY WRENCH that the seller cannot ignore – lis pendens is Latin for, “pending lien.”

The ‘lis pendens’ notice of pending action – has the same case number and title as the complaint that your real estate attorney will have already filed or is simultaneously filing the same day that will begin your civil lawsuit. The lis pendens states clearly that the plaintiff (buyer), has sued the defendant (seller) challenging the ownership of the property. Some tricky buyers might try to fake a lawsuit by filing a lis pendens document without first filing the complaint that starts the actual civil suit which is why the lis pendens and the complaint are titled and numbered identically as the title company will, if they do their due diligence, and double check.

The plaintiff’s lawyer will quickly record the lis pendens notice – with the County Recorder’s office in the county where the property is located to prevent the end-run sale to a 2nd or even 3rd buyer. By filing the lis pendens notice with the county recorder, the lender (if there is one) will not lend, and the title insurance company will not deliver to escrow a clear title as the title is now a clouded title because someone else (the original buyer) is claiming ownership rights to the property by means of their valid contract to purchase.

Buyer’s Strategy of Filing Specific Performance Lawsuit

Most lis pendens actions resolve the attempted breach of contract rapidly. The greed for a seller to pocket $25,000 or even $100,000 more dollars by breaching a real estate sales contract with a legitimate buyer is strong motivation UNTIL a lawyer files a lawsuit and HALTS the sale of the property to anyone other than the original buyer. Often within a few days or a week following filing a specific performance lawsuit and filing a lis pendens with the county recorder’s office, the seller will deliver his deed to escrow whereupon your escrow will close and you will receive clear title.

Fight for It – or Lose It

Some sellers are often trapped in a cycle of greed when selling a property. It is often up to you, the victim-buyer, to put the screws to a greedy-seller who is legally in breach-of-contract with you. If you don’t take the initial steps of legal action, you are most likely going to lose the property you want. The good news is that these disputes rarely go to expensive litigation and can be solved in days or weeks.

MONEY WELL SPENT – Yes, it sometimes takes spending money to have a competent real estate lawyer first attempt to negotiate with a reluctant seller, and if necessary, file a lis pendens action. You can effectively cause the property to become unsellable to anybody but you, the contractual buyer. Your seller’s choices become very limited.

Legal Fees Included in New Mortgage – it is often possible to reimburse yourself for the unexpected real estate legal at escrow close using mortgage money as part of the cost of professional services to the real estate transaction.

Seller’s Breach of Real Estate Contract Remedy Against a Buyer

The seller of real property may also file a lawsuit against a defaulting buyer – for ‘specific performance’ of the sales contract. The relief obtained by the seller in this kind of specific performance lawsuit is the recovery of money because the court can only enter a judgment requiring the payment of the purchase price amount.

The seller who retains a buyer’s earnest money down payment can still sue for specific performance. That said, if the contract provides for a specific, exclusive remedy in the event of the buyer’s breach, the seller is precluded from bringing a lawsuit for the purchase price.

EXAMPLE: In most states, the buyer’s deposit is considered earnest money, which suggests an agreement of an already specified liquidated damages in the event of a breach of the sales contract, and specific performance beyond the earnest money escrow deposit cannot typically be ordered.

In all cases, specific performance is granted at the court’s discretion. The court will only grant such relief if there is a valid contract between the parties and if the buyer has signed the contract. Moreover, all the conditions of the contract applying to the seller must have been performed. Moreover, the seller must be ready, willing and able to comply with the contract, by being ready and prepared to convey to the buyer a clean and marketable title (i.e. no defects in the title being conveyed).

Experienced Real Estate Lawyer – Sound Legal Advice

When the purchase or sale of a property begin to unravel, considering the BIG numbers involved in the average Orange County property, it is in your best interest to seek quick, wise, legal advice. Edwin Fahlen offers competent and affordable legal advice to individuals, professionals and business owners participating in the Orange County real estate market and beyond. Mr. Fahlen is an Orange County real estate lawyer and a licensed California Real Estate Broker and Realtor.

Specific Performance and lis pendens is a remedy that a buyer can use to pressure a seller to follow through with a real estate deal, or even collect money damages in some cases. Edwin Fahlen can help you solve your breach of real estate contract and offers a free phone consultation to talk it over. Call Edwin at (714) 395-5605

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