[The following article was excerpted from John T. Blanchard's law school textbook,
California Remedies: Commentary, Materials and Problems (3d ed. ©1997)]
Specific Performance is an equitable remedy for breach of contract. It is an alternative when money damages, the usual legal remedy, is inadequate. In gist, the remedy does exactly what its name implies, it forces the defaulting party to perform his contractual obligations exactly, absolutely, precisely - specifically. That is, if the remedy is available it coerces the performance required under the parties' contract (usually conveyance of title to the property, but any unique subject matter is sufficient) rather than the usual substitute relief, the payment of money in lieu of actual performance.
When ordering specific performance the Court, subject to certain "ancillary remedies", orders that the contract be performed on the terms originally negotiated by the parties. In an era of extended delays between initial filing of Complaints and final trial adjudication (during which time the market value of property may fluctuate substantially) an order that a party relinquish control over a property in return for a purchase price negotiated sometimes years before is very serious. Therefore, before embarking on extended litigation both the parties and their counsel should carefully weigh their respective cases. Here it bears emphasis that the plaintiff (usually a disappointed buyer) often has relatively little to lose during the litigation; he has put up little or none of the total purchase price and can assess the market's movement during the course of the litigation. The defendant (usually the recalcitrant seller) has no such option. He often cannot sell the property while the litigation is pending because of a cloud placed on title during the pendency of litigation (by a Notice of Pendency of Action, sometimes called a lis pendens) and cannot expect an adequate adjustment in the purchase price in the event he loses the lawsuit. Often, perhaps usually, the seller must win the lawsuit in order to avoid a financial disaster.
"As is the case with other equitable remedies,
specific performance is not available unless the legal
remedy is 'inadequate.'"
As is the case with other equitable remedies, specific performance is
not available unless the legal remedy is "inadequate". Since breach of contract is the cause of action underlying Specific Performance it follows that the essential elements of that claim are also essential to Specific Performance; only the last element, damages proximately caused by the defendant's breach, is different. "Inadequacy of legal remedy" is usually proven easily in the context of real property litigation because real property is presumed to be "unique". Thus, though they may (or may not) theoretically exist, money damages are, by hypothesis, "inadequate".
In addition, as one would expect when examining an equitable remedy, other basic equitable considerations must be present. No only must consideration support the contract, to be specifically enforced that consideration must be "adequate". "Adequacy" does not mean that the contract price exactly matches, or exceeds, the fair market value of the property; instead, to be "adequate" the agreed consideration must only approximate the market value sufficiently that the conscience of the Judge (sitting as a chancellor in equity) is not offended. Real property contracts often unfold over significant periods of time. Since the market value of the property may fluctuate during the pendency of the contract - a risk factor that should be evaluated carefully before entry into such a contract - it is important to note that the "adequacy" of the consideration is measured as of the parties' entry into the contract, not at the time for performance (and certainly not at the time of trial). To measure the "adequacy" of the consideration at any other time would deprive the buyer of the benefit of his bargain.
A closely related requirement of an action for Specific Performance is that the contract be "just and reasonable" as to the party against whom the decree will operate. One respected treatise notes "[i]t is questionable whether this requirements adds anything to the separate statutory requirement of adequate consideration"; however, this comment ignores the fact that, while financial gain is usually the primary goal of real property sales contracts, it is often not the only goal. The requirement that the contract be "just and reasonable" also operates as to the nonfinancial elements of the parties' contract.
"The most common analytical error made as to this essential element is
confusion of uncertainty as to whether the act must be performed...
and uncertainty as to what the act to be specifically performed is..."
Because the Court will, if the decree of Specific Performance is granted, be compelling the performance of specific acts (the failure to obey may be punishable by contempt) the contract must be "sufficiently certain to make the precise act which is to be done clearly ascertainable". The most common analytical error made as to this essential element is confusion of uncertainty as to whether the act must be performed (that is, doubt as to whether the contract in question is legally binding, supported by "adequate" consideration, etc.) and uncertainty as to what the act to be specifically performed is (such as executing and delivering a Grant Deed).
Since a buyer must tender (that is, offer) payment as a prerequisite to an action for specific performance unless the seller has repudiated the agreement, the buyer must demonstrate that he was "ready, willing and able" to complete the purchase at the time his performance was due under the agreement and at the time of the decree of Specific Performance. The decree will be conditional (that is, it will provide, for example, that the buyer is to receive a deed when - that is, on condition that - the buyer pays the purchase price). While it was for a time thought that the conditional nature of this remedy nullified this element of the Specific Performance plaintiff's case (that is, it was thought that the plaintiff-buyer was not required to prove financial ability because the decree of Specific Performance was conditional and, thus, if the buyer lacked the finances to pay for the property he would simply never be able to enforce the decree and it would later lapse due to the buyer's inaction); however, later cases affirmed the necessity of pleading and proving ability to perform (particularly as to the buyer's financial obligations and especially when the seller was to rely on the buyer's financial means in the future, as when the seller was to take back security in the property as a part of the purchase price).
Specific Performance may, and sometimes must, be denied if the decree is "not feasible to enforce". The decree must be denied when it would be impossible for the defendant to conform to its requirements. The most typical instance of such impossibility arises when the defendant has been divested of title to the property in question (with title being held by a bona fide purchaser at the time of trial). In real property situations the defendant is commonly prevented from transferring title by the recordation of a Notice of Pendency of Action (also known by its "law french" title, lis pendens) in the records of the County Recorder (thus, preventing a later purchaser from taking title without notice of the Specific Performance action. The court may also decline to decree Specific Performance it such a decree would otherwise be "not feasible to enforce" because, for example, the decree would require supervision of a series of future performances or would require the court to approve performance to the taste or subjective satisfaction of the plaintiff.