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Specific Performance Clause May Not Be Enforced In Sale-Leasebacks

By Peter E. Fisch and Salvatore Gogliormella
November 01, 2022

Specific performance is an important remedy in real estate transactions, and is typically specified when drafting agreements for the purchase and sale of real estate; in the event that the seller breaches its obligation to sell the property, the buyer can seek court intervention compelling the seller to follow through with the sale. However, a specific performance remedy is disfavored by the courts, and under certain circumstances (particularly in the case of sale-leasebacks), a specific performance clause, even if properly drafted, may not be enforced by the courts.

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Specific Performance Generally

Specific performance is an equitable remedy for a breach of contract, in which a court will force the breaching party to perform its contractual obligations. Although courts generally prefer awarding monetary damages to the non-breaching party, they do have discretion to award specific performance.

However, the remedy of specific performance is typically disfavored and is reserved for transactions involving items that are unique. Courts will often take the view that parcels of real property are unique and that, where a seller breaches its obligation to sell real property, the buyer will not be made whole by an award of money damages. Courts are, therefore, more willing to specifically enforce agreements pertaining to the sale of real property.

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