The recent related cases In re Sky Lofts and In re S&Y Enterprises,1 in the U.S. Bankruptcy Court for the Eastern District of New York, areillustrative of the issues that face contract vendees under real estate contracts of sale where the seller rejects the contract in bankruptcy, thereby cutting off the buyer’s specific performance remedy.
A typical real estate contract of sale provides two alternative remedies to the purchaser in the event the seller defaults in conveying the property. A purchaser can generally elect between (1) termination of the contract and, in some cases, recovery of expenses (or liquidated damages intended to reimburse the purchaser for its costs and expenses) or (2) a suit for specific performance pursuant to which the court may compel performance by the seller.
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