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What Happens If You Sell the Same Land to Two Separate Parties? Specific Performance as a Remedy
When seeking justice through the courts, a person or party who has been wronged may receive compensation to help right that wrong. That compensation may be a “legal remedy,” which means it can take the form of monetary damages, or it may be an “equitable remedy,” which includes remedies that don’t involve money. Specific performance is one such equitable remedy.
Specific performance was at the heart of a case that was heard by the South Carolina Court of Appeals in February 2020, Shirey v Bishop, in which a woman entered into two agreements to sell the same piece of land to two parties.
Specific Performance as an Equitable Remedy
Specific performance is a legal concept where the court can order a party to perform a specific act. The performance of the specific act is the equitable remedy that compensates the injured party for the wrong done to them.
Usually, the specific act is the completion of a contract they were already party to and is most commonly seen in cases involving the sale or purchase of land. That’s because the law considers land unique; even if the injured party were awarded monetary damages, they would not be able to purchase a piece of land identical to the one in question, because every piece of land is different.
Specific performance may also be compelled in cases not relating to real estate. For example, the Uniform Commercial Code (UCC), a set of laws adopted by all 50 states and D.C. that standardizes commerce laws between the states, does allow for specific performance as a remedy to the buyer in some cases. “Specific performance may be decreed where the goods are unique or in other proper circumstances” (SC Code Section 36-2-716). However, in practice, specific performance as a remedy is rarely used in cases not involving the conveyance of land.
Selling the Same Land to Two Separate Parties
We can see specific performance in action in Shirey v Bishop.
The background: Gwen G. Bishop and her husband ran a grave digging and burial vault business together for over 30 years from a property (the Property) located in Newberry County, SC. After her husband’s death in 2010, Bishop ran the business by herself, but soon decided she no longer wanted to continue.
In April 2012, Bishop agreed to sell the Property to her niece, Cassandra Robinson. They entered into a contract under which Robinson agreed to pay Bishop’s mortgage until it was satisfied. (The mortgage holder, TD Bank, was not notified of this arrangement and did not agree to it.) The contract was never recorded.
A few years later, in late 2014 or early 2015, Bishop then entered into an agreement to sell the Property to Robert G. Shirey, even though she had already previously entered into a contract to sell it to her niece.
Shirey and Bishop signed a contract (the Shirey Contract) in which Shirey agreed to buy the land for $125,000, including $1,000 in earnest money. The contract included a provision that the closing must occur “no earlier than Aug 3, 2015 [,] and no later than Aug 12, 2015.”
They set the date of closing for August 12, 2015. Shirey brought a check for $122,976.92 to his attorney’s office and waited for Bishop to arrive for the closing to complete the transaction. She never showed up.
Shirey’s attorney then called Bishop and asked if the closing period could be extended to the following day, the 13th. Bishop agreed, and a new appointment for the closing was set.
Once again, Bishop did not show up. Her doctor sent a note to Shirey’s attorney asking to excuse Bishop from the closing.
But that same afternoon, when she should have been closing the deal with Shirey, Bishop entered into a second contract to sell the Property to Robinson. Robinson agreed to purchase the Property for $33,000 and assume the mortgage. Bishop executed a deed conveying the Property to Robinson, and Robinson recorded the deed the same day.
The Case is Heard by a Special Referee
On August 20, 2015, Shirey filed a complaint against Bishop requesting specific performance of the Shirey Contract plus attorney’s fees. He later amended his complaint to add TD Bank (the mortgage holder) and Robinson after he discovered the deed conveying the land from Bishop to Robinson.
In March 2017, the case was heard by a special referee. (A special referee is lawyer who has expert knowledge in a particular field and may hear cases where the law is clear but the facts are in dispute. They judge on the facts and bind the parties to a decision.)
In May 2017, the special referee found in favor of Shirey, setting aside the deed to Robinson, awarding attorney’s fees to Shirey, and ordering specific performance of the Shirey Contract. This means that Bishop and Shirey would need to carry out the terms of their contract and Robinson would lose the Property.
Bishop and Robinson appealed.
Requirements for Specific Performance
Quoting another case, the SC Court of Appeals states in its opinion:
“In order to compel specific performance, a court of equity must find (1) clear evidence of an agreement; (2) that the agreement has been partly carried into execution on one side with the approbation of the other; and (3) that the party who comes to compel performance has performed on his part, or has been and remains able and willing to perform his part of the contract.” (Gibson v Hrysikos, 1987)
The Appellants raised a few arguments against the validity of the special referee’s awarding of specific performance, including these two: 1, there was no valid contract for the conveyance of the land from Bishop to Shirey and 2, Shirey had not demonstrated that he was able to perform the contract.
Contract Validity and the Statute of Frauds
The Statute of Frauds (SOF) requires certain types of agreements to be in writing and signed in order to be enforced by law. Under this statute, contracts involving land must be written down. Furthermore, modifications or amendments to the agreement must also be in writing to be enforceable.
In this case, the Appellants argue that the special referee erred in finding Shirey was entitled to specific performance because there was no valid contract, a valid contract being the first of three requirements to compel specific performance, as stated above.
They argue that the Shirey Contract was no longer valid because the closing did not happen within the period specified in the contract. After Bishop failed to show up at the closing on August 12th – the last day that the deal could go through, according to the Shirey Contract – Shirey’s attorney called her and they agreed to extend the closing period by one day. This was an oral agreement and was not written down.
So, does this make the Shirey Contract invalid under the SOF? It’s a very interesting legal question but unfortunately, we don’t get an answer. It’s well established that an issue cannot be brought up anew on appeal, and that’s what happened here. The SC Court of Appeals dismisses the argument because the Appellants did not bring it up to the special referee nor did they bring it up in their answers to Shirey’s complaint.
Capability of Performing the Contract
The Appellants also argue that Shirey did not demonstrate he was capable of performing his obligations under the Shirey Contract both at the time of closing and when he brought the legal action. Ability and willingness on the part of the complainant to perform their part of the contract is the third of three requirements to compel specific performance, as stated above.
Shirey argues that he fulfilled his obligations under the Shirey Contract by tendering the purchase price on August 12, 2015, the original closing date, when he brought a check for the purchase price to his attorney’s office. He had also put down $1,000 in earnest money. At the time of the appeal, he was still ready, willing, and able to go through with the Shirey Contract. Therefore, the SC Court of Appeals agreed with Shirey.
The Importance of Legal Help for Real Estate Contracts
Finding that all three requirements to compel specific performance were satisfied, the SC Court of Appeals affirmed the special referee’s grant of specific performance. The deed from Bishop to Robinson will be set aside and the Property will be sold to Shirey.
Most people know better than to enter into multiple contracts to sell the same piece of land to different parties. Still, real estate law can be complex, and getting the right help with real estate transactions, particularly in business, is crucial.
Gem McDowell is a commercial real estate attorney and business attorney with nearly 30 years of experience in the law. He has closed over $1 billion worth of real estate deals, including a single deal of $270,000,000. Along with his extensive experience, he’s also a problem solver who can help you grow and protect your business. To schedule an appointment or a free 20-minute consultation on your issue, call Gem and his team at his Mount Pleasant, SC office at 843-284-1021 today.