Webinar Recap: Is Your Purchase & Sale Agreement Really Binding?

In our February webinar, Imants Holmquist and Rob Maxwell discussed some critical components of purchase and sale agreements (PSAs).   

Residential PSAs

Rob discussed commonly seen issues that result in PSA disputes including:

• Seller’s disclosures statement (Form 17)

• Title review issues

• Lack of or incorrect legal description of the property

• Missing terms in the PSA

• Remedies election (Form 21), including forfeiture of earnest money

• Waiver of contingencies

Commercial PSAs

Imants discussed a few common terms that are negotiated in commercial purchase and sale agreements including:

• Survival clauses, which limit the time after the closing the buyer can bring claims for breach of the seller’s representations and warranties.

• Reimbursement of due diligence costs, especially for development sites

• Assignment provisions

• Remedies election, including caps that limit the buyer’s ability to recover certain losses from the seller, even if when the seller breached the representations and warranties in the PSA; and specific performance.

A Deep Dive into Specific Performance

 Two cases established what the remedy of specific performance is:

1.    “Specific performance is an equitable remedy used to compel the performance of contractual obligations.” – Kreger v. Hall

2.    “Specific performance is intended to put the contracting parties in the same position they would have been in had the contract been performed.” – Kofmehl v. Steelman

The remedy of Specific performance is only available if there is a valid and binding contract. It is available when the legal remedies of damages and restitution aren’t adequate. Real property transactions are generally unique, and therefore, monetary damages are generally insufficient to make a claimant whole.  Notably, a party cannot receive both specific performance breach of contract damages. To claim specific performance, the plaintiff must also show:

• The obligation is not for personal services, to perform an unlawful or impossible act, or to procure the act or consent of another party.

• The terms of the agreement are sufficiently definite to avoid ambiguity.

• The agreement is just and reasonable to the party and third parties against whom it’s sought.

• The party seeking enforcement has fully and fairly performed all conditions and has acted equitably.

• The defendant has breached or threatened to breach. 

Plaintiffs also must demonstrate that the contract includes all material terms, written precisely enough to avoid doubt as to what was intended.

Because industry forms are updated and laws and regulations change frequently, it's wise to review all forms and contracts with an attorney who specialized in real property transactions.

This information doesn’t constitute insurance or legal advice. Always check with an attorney or insurance expert before making decisions.

A full recording of the webinar is below. As ever, reach out if you have any questions.