A legal remedy in which a court orders a breaching party to fulfill their exact contractual obligations.
Why Specific Performance matters on the exam
This term belongs to Contracts. The questions below are real items from Freehold's bank that use it - each one cites its source.
Exam questions using Specific Performance
Every Freehold question shows why the right answer is right — and cites its source.
A buyer defaults, and under the contract the seller keeps the earnest money as the sole remedy. This remedy is called:
Specific performance
Liquidated damages
Punitive damages remedy
Rescission
Show answer & explanation
Liquidated damages — Liquidated damages are an amount agreed in the contract as compensation for a breach — commonly the forfeited earnest money. Specific performance instead asks a court to force completion of the sale.
Source: PSI National Real Estate Exam Content Outline §7 Contracts
An optionor sells the property to a third party during the option period, in violation of the outstanding option agreement. What is the optionee's most likely remedy?
The optionee may pursue legal remedies against the optionor, potentially including specific performance or damages for breach
None, because option agreements to purchase real property are not legally enforceable contracts under the statute of frauds in any jurisdiction that has adopted it
The sale to the third party is automatically void the moment the optionee discovers it occurred
The optionee automatically and immediately becomes the sole new record owner of the entire property despite the third-party sale
Show answer & explanation
The optionee may pursue legal remedies against the optionor, potentially including specific performance or damages for breach — A valid option is a binding contract obligating the optionor to sell to the optionee if the option is exercised; selling to someone else during the option period is a breach that exposes the optionor to legal remedies.
Source: PSI National Real Estate Exam Content Outline §7 Contracts
Specific performance is a remedy that:
Allows the seller to keep the earnest money as a penalty
Simply awards the non-breaching party full money damages equal to their loss
Automatically cancels the contract and returns the parties to their original positions
Compels the breaching party to actually complete the transaction as agreed
Show answer & explanation
Compels the breaching party to actually complete the transaction as agreed — Specific performance is an equitable remedy in which a court orders the breaching party to carry out the contract's terms, commonly used in real estate because each parcel of land is considered legally unique.
Source: PSI National Real Estate Exam Content Outline §7 Contracts
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