Specific Performance is the bogeyman of the real estate transaction. The whole point of specific performance is to ensure that the parties receive the value of the original bargain and that the contract previously wrought is upheld. County of Lincoln v. Fischer, 399 P2d 1084 (Or. 1959). When a contract goes haywire or when a Seller terminates, the Buyer has the right to claim for specific performance, wherein a court forces the parties to complete the contract based on the terms of the purchase agreement. Specific performance is only available when money damages are not an adequate remedy, which means it is only a remedy available to the Buyer. Kazlauskas v. Emmert, 275 P3d 171 (Or. App. 2012). In a real estate sale, the Seller’s end goal is to walk away with a bundle of money and the Buyer’s goal is to walk away with a very specific property. If the transaction fails, Seller doesn’t have that bundle of money [so Seller can be compensated with a different bundle of money], but Buyer can’t ever find that same specific property [each property is geospatially unique, there’s no other place just like it in just the same place]. The right to force a sale contract to be followed is a right expressly reserved to the Buyer in these real estate contracts. Philosophically this makes sense because the Seller generally has the power of acceptance in most real estate contracts and if the transaction falls apart, the Seller still has the fee title to the property, whereas the Buyer may lose the financing or may be unable to find a sufficient property to meet their needs. In the abstract, the Buyer has more to lose, so the courts allow the Buyer a greater ability to ensure the contract is followed as agreed.
Specific Performance in the abstract is a judicial order to force a Seller to perform as required by the contract; it is a response to a Seller’s failure to perform their contractual duties or obligations. To pursue specific performance, there has to be an enforceable contract; it can’t just be a letter of intent or an oral agreement to sell. The judge must find that the seller’s refusal to perform will not cause hardships on the buyer, weigh that against the hardships that will be caused to the Seller if the seller refuses to perform [something like “but look how much more my house is worth now that the market has improved…” is not considered a hardship in the classic sense]. A bad bargain struck by the seller is not considered a hardship, the seller agreed to the terms and was expected to have modified or countered or rejected the terms if they believed the bargain was truly bad. Meyer v. Kesterson, 950 P2d 896 (Or. App. 1997). The Buyer can only receive specific performance if they agree to perform every condition of the contract. The Buyer cannot force performance of only portions of the contract, they have to do the whole thing. Similarly, if the Buyer asks for specific performance, they must be able to prove that they are ready and able to perform at that time. Voin v. Szabo, 913 P2d 717 (or. App. 1996). If the Buyer’s financing could still fail, if the Buyer’s property has to sell first, if anything disrupts the Buyer’s immediate ability to perform, the court will not grant specific performance. If the contract permits the Seller to terminate, the courts will equally be reluctant to grant specific performance [e.g. if the Seller added a contract provision that stated, “Seller allowed to unilaterally terminate this agreement at seller’s sole discretion until closing,” the courts will not force specific performance because the Seller was not in breach of the contract by invoking the termination right].
The realistic risk of specific performance is why the Oregon REALTORS® Form 5.4 Seller Notice of Termination provides such a stark warning on the section 8 “Other termination” provision. If a Seller is terminating for a reason that is not stated within the contract, the Seller may be the one breaching the contract and risks having their termination being overturned by the court.