Lydon v. PCAM Assocs., 2015 N.J. Super. Unpub. LEXIS 1565, Docket No. A-2914-14T1 (App.Div. June 30, 2015)

Claim for specific performance is available to a buyer of a custom-designed home where completed construction is alleged to deviate from plans and specifications.

The plaintiff claimed the defendant deviated from the agreed upon plans and specifications and substituted inferior materials under a contract for construction of a custom-designed single family home. Prior to the defendant’s obtaining a Certificate of Occupancy, the plaintiff filed a complaint in the Chancery Division seeking, among other remedies, specific performance of the defendant’s obligation to construct the home in accordance with the plans and specifications. After the Certificate of Occupancy was issued, the plaintiff refused to close title on the property and, instead, submitted a letter to the defendant with the items the plaintiff considered unfinished. The defendant argued that the plaintiff was not entitled to specific performance as the plaintiff had not demonstrated it was ready, willing and able to perform under the contract and that the plaintiff had an adequate remedy available at law. The Appellate Division reversed the dismissal of the claim for specific performance, finding that the plaintiff’s remedy at law for damages would not be as adequate, complete, or efficient and that specific performance in the context of real estate contracts is presumed because real property is deemed to be unique. The Appellate Court further found that the plaintiff`s non-performance was based on a genuine issue as to whether the defendant was prepared to deliver the building as promised. In rendering its decision, the Appellate Court acknowledged that there are cases holding that courts of equity will not ordinarily enforce the performance of construction contracts based on the difficulty of rendering a judgment detailing specifications for, and supervising performance of, the work. In this instance, however, the court specifically noted that construction of the home was already complete from the defendant’s perspective and that the heart of the dispute was whether it conformed to the plans and specifications. The plaintiff expressed a willingness to accept the property with an abatement of the purchase price. Therefore, the trial court was directed to conduct a hearing to determine whether the plaintiff is ready, willing, and able to close title with an abatement and, if so, to order specific performance with a sum to be held in escrow pending resolution of the dispute.


Case Law Alerts, 4th Quarter, October 2015

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