Just as millions of cars arrive safely at their destination each day, thousands of apartment building sales occur each year without mishap. And just as the emergency rooms bear grim testimony to the consequences of some drivers' carelessness, so too are the courtrooms the gruesome and expensive battleground of those deals that went sour. This article will explain a very basic danger of selling an apartment building and what you can do to protect yourself.

The Basic Rule
There is a fundamental difference in the way that the law treats contracts for the sale of real estate as compared to most other types of property. The difference is that if you default under a contract for the sale of real estate, the other side can elect as to whether it sues you for damages or for "specific performance" - i.e. ask the court to order you to deliver the property itself. Under most other contracts, this latter choice is unavailable. What this means in a practical sense is that you can breach any contract you like so long as you're willing to pay damages, but in real estate transactions you run the risk of the judge ordering you to deliver what you promised.

Lis Pendens
While the reasons for this are to be found in medieval England, the consequences today are far from academic. California law recognizes that the buyer's remedy of specific performance would be useless if the seller simply sold the property to a third party before the buyer can get his court order (a long and expensive process even in the strongest case). The law therefore allows buyers of real property who claim that the purchase contract is breached to file a warning in the county records notifying any possible buyers or other interested parties of the pending lawsuit (lis pendens, which is Latin for the same thing).

The bottom line is that because any one can claim a breach of contract with or without having any good reason, and because it can take literally years of litigation to resolve contractual disputes, the seller is always at risk when trying to sell an apartment building. Unfortunately, there are individuals who capitalize on the fact that it is all too easy - and profitable - to contract to purchase a piece of property and then literally to hold the seller to ransom.

What If the Worse Happens
If you've already signed a purchase and sale agreement and something does go wrong, is there anything that you can do? There is no specific answer to this , but a good approach is to use a "carrot and big stick" strategy. In other words, you need to make it clear to the buyer that while you wish to avoid confrontation, you are not afraid to fight and, if forced to do so, then you will fight to win. You should present the buyer with a proposed fair compromise (the carrot) and a draft Complaint, which should include a cause of action for slander of title and which you must be prepared to follow through with (the big stick). Competent legal advice is, of course, a must at this stage.

Safety Tips for Sellers
Sellers should keep the following in mind when negotiating the purchase and sale agreement:

1. Make sure you know who you're dealing with. Someone who makes an attractive offer on your property and who has a relatively small good faith deposit in the bank should not thereby qualify to have your signature on a document that can destroy the marketability of the property. As a seller, you should do your own due diligence and find out what the buyer's track record is, where the money is coming from and so forth. For a small fee you can check out his or her litigation history. Having good sources in the local market (for example, a seasoned title insurance and/or escrow company) is also invaluable.
2. Have the buyer waive his right to specific performance. So long as it is properly drafted, such a waiver will be respected by the court. The buyer will obviously want to receive something in return. One offer might be to grant him the right to liquidated damages (i.e. a specified amount to money) if you default. In most contracts, the buyer will already have requested such a provision, and so the response "OK so long as I get the same thing" at least has the advantage of sounding reasonable.
3. Include an arbitration clause in the purchase and sale agreement. A full discussion of the pros and cons of such provisions are beyond the scope of this article, but a properly drafted arbitration clause is generally advantageous both for buyers and for sellers.

CONCLUSION
While selling an apartment building usually goes smoothly, the risk of litigation is large because of the potentially disastrous consequences - the unmarketability of the property, possibly for years. Getting professional help to avoid the risk is cheap insurance.