Specific Performance: Court Finds Vacant Land “Unique”

When a commercial real estate transaction goes south, purchasers often ask their lawyers if they can advance a claim for specific performance of the contract. The answer is often “no”, due to the fact that specific performance is only granted in instances where the property is unique, such that damages would not be a satisfactory remedy for the aggrieved purchaser. “Uniqueness” may lend itself to residential property, but often not to commercial property given that commercial property is being acquired for profit and therefore there are other, similar, properties available to be acquired.

 

However, recent decisions, including one released last week by the Superior Court, have held that commercial property can in fact be found to be “unique” such that a claim for specific performance can be maintained.

 

The purchaser wished to acquire a piece of vacant land that was nearly 7.5 acres for the purpose of developing and managing a commercial plaza. The parties entered into an agreement of purchase and sale. The deal remained conditional on the purchaser obtaining the necessary re-zoning approvals. It took the purchaser nearly 6 years and $500,000 before it finally obtained those approvals. Once obtained, the purchaser waived the last of its conditions.

 

As the closing date approached a dispute arose between the two parties over which parcels were required to be included in the transaction. The transaction did not close and the purchaser brought a claim for specific performance and moved without notice to obtain a certificate of pending litigation (“CPL”) on the property so that the vendor could not re-sell the property pending the outcome of the case.

 

The vendor brought a motion to have the CPL discharged on the basis that, among other things, the land was not unique by virtue of the fact that the purchaser’s intention was to obtain the property for investment / profit.

 

The motions judge rejected the vendor’s argument and allowed the CPL to remain on title to the property pending the trial of the case. The motions judge held that the purchaser had a specific use, being to rezone to build and lease a commercial plaza and not to resell the land, or to develop and resell the land. The judge noted that the property was not being purchased as a passive investment such as building lots or an existing apartment building, but rather as part of the purchaser’s business of taking land from a raw state and developing it and managing it for years to come. This, coupled with evidence that the property was in a pivotal and desirable location and that a substitute property was not readily available given the unique location in the City and its zoning, was sufficient or the motions judge to find that the property was “unique” in the sense that the word has been interpreted for the purpose of a CPL.

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