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Centex Homes Corp. v. Boag

    Brief Fact Summary. On September 13, 1972, Defendants Mr. & Mrs. Eugene Boag decided to purchase a condominium from Plaintiff Centex Homes Corp. for $73,700, by first paying a deposit of $525 and by then tendering a check for the down payment of $6,870. Then, on September 27, 1972, Boag, upon learning he was to be transferred to Chicago, wrote and advised Centex that he “would be unable to complete the purchase” agreement and stopped payment on the check for $6,870. Centex deposited the check for collection approximately two weeks after the letter from the Defendant Boag, but the check was not honored.

    Synopsis of Rule of Law. The remedy of specific performance should no longer (in this jurisdiction) be automatically available to a vendor of real estate, but should be confined to those special instances where a vendor will otherwise suffer an economic injury for which his damage remedy at law will not be adequate, or where other equitable considerations require that the relief be granted.

    Facts. On September 13, 1972, Defendants Mr. & Mrs. Eugene Boag decided to purchase a condominium from Plaintiff Centex Homes Corp. for $73,700, by first paying a deposit of $525 and by then tendering a check for the down payment of $6,870. Then, on September 27, 1972, Boag, upon learning he was to be transferred to Chicago, wrote and advised Centex that he “would be unable to complete the purchase” agreement and stopped payment on the check for $6,870. Centex deposited the check for collection approximately two weeks after the letter from the Defendant Boag, but the check was not honored. On August 8, 1973, Plaintiff Centex instituted this action for specific performance of the purchase agreement or, in the alternative, for liquidated damages in the amount of $6,870. Centex made a motion for summary judgment, upon which this Court will rule.

    Issue. Does the equitable remedy of specific performance lie for the enforcement of a contract for the sale of a condominium apartment?

    Held. No. Centex’s complaint in specific performance is denied. Under the provisions of Centex’s purchase agreement regarding liquidated damages for breach, the amount is limited to such monies paid by the Boags at the time of the breach, or $525.
    Under the condominium housing scheme the units which are sold are considered real estate, and the purchaser receives a deed which is then recorded. The only difference between condominiums and other realty is that the owner of a condominium also owns an undivided interest in common areas. Centex argues that because the subject matter is real estate, then the equitable remedy of specific performance should be available.
    The Court found that the history of the doctrine of specific performance in real estate transactions is that the vendee of land may sue in specific performance due to the uniqueness of land and the inadequacy of damages at law, and that the vendor may sue in specific performance based on a concept of mutuality of remedies. The mutuality of remedies means that the remedy of specific performance would not lie unless the remedy was available to vendor and vendee.
    This Court questions the rationale of allowing vendors of real estate to sue in specific performance, because the vendor’s remedy in an action at law for damages is sufficient. This Court found that the proper test to determine mutuality of remedy is whether the obligations of the contract are mutual and not whether each is entitled to the same remedy in case of the breach. The Court noted that the trend was toward the disappearance of the mutuality of remedies doctrine.
    The Court concluded that the remedy of specific performance should no longer be automatically available to a vendor of real estate, but should be confined to those cases where the remedy in damages will not be adequate to compensate the vendor, or when other equitable considerations are present. The Court found that the condominium unit at issue in this case was not special nor unique and that hundreds of identical units were being offered for sale by the vendor. The Court noted that, despite the condominium unit’s label of realty, the units shared the same characteristics as personal property. Therefore, the damages at law are sufficient and specific performance will not lie.
    The damages at law, or liquidated damages in this case, under the purchase agreement, consisted of all monies paid by the Defendant Boag at the time of the breach, which was the deposit of $525.

    Discussion. Specific performance is an extraordinary remedy which should only be imposed when the damages at law are impossible to determine or wholly inadequate to compensate the non-breaching party. The case of condominium law is a specialized area of the law, which is varied according to jurisdiction.


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