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I think the PSA is a red herring. The issue of specific performance not being available is a matter of the actual conveyance, not the promise to convey to the third party. To the extent you are barred from seeking specific performance based on the other co tract, it would be a factual matter of whether or not you “came to equity with clean hands” as a result of knowing about the other contract. But if you didn’t instigate a breach, I don’t think that’s much of an issue either as back up contracts aren’t common, but also not u heard of and deals die all the time for other reasons.
Personally, while I always negotiate for specific performance as a remedy on the big side, I don’t think it’s all that big of a deal because it’s pretty unlikely you’d actually ever seek it on a sophisticated property as there are usually a bunch of other attendant duties that need to be performed as well that might be a problem (management contracts, amending declarations, assigning development rights). Often you end up in a situation where you’d never want to take title to the land if you had an acrimonious situation with the seller.
And the idea of there being two deeds floating out there isn’t much of an issue either except in the event of outright fraud. Title companies will require owner’s affidavits it order to close deals, even for the rare quit claim deed based transaction. So you’d have to have a seller who would be willing to not only execute two quitclaim deeds, but also to execute untrue affidavits. News flash: it’s almost impossible to protect against that kind of deception in any event.
Right, if you were buyer under the second deed and aware of even the remote possibility of the first buyer actually closing and recording a deed within the search gap, practically speaking you probably wouldn't close let alone accept a quit claim deed.
As far as race/notice, I'm not sure whether knowing of a possibility of another deed being recorded would qualify as notice of the deed (as opposed to notice of the psa). I would think not, so if you manage to get yours recorded first and don't actually know that the other deed was signed but not recorded, then you probably win
…have the right to sue for unlimited damages. I am assuming in this scenario that if the third party has no knowledge of the earlier PSA and closes and records without knowledge, they are an innocent purchaser without knowledge and hence in race notice jurisdictions take clear title and hence the first buyer is left without specific performance (getting the deposit back as the buyer’s sole remedy is worthless).
But what if the second sale is to another party who knows about the earlier PSA, aren’t they bound by it in most race/notice jurisdictions?
This is a very interesting question, and I don’t know that it is completely specific to GA. I’m going to look into this myself in FL. But what kind of damages would you have? Once the property is sold and escrow is closed and the former owner is a soon-to-be dissolved LLC, I don’t know what the remedy would be for damages. While this situation sounds like an absolute mess, I’ve never encountered it. I guess it depends on what is in the remedies clause in the original PSA. Maybe you might have a tortious interference claim against the ultimate buyer though. I don’t know what the law is on that in GA. Depends on how hard the party left at the altar wants to fight, I’d suppose.
The definition of “Knowledge” in a title insurance policy will leave you with no defense if you’re looking for coverage on an issue like that. “Matters known to the Insured” and so on.
I think the knowledge of the 2nd contracting party is irrelevant, outside of someone making a tortious interference claim. A contractual right to buy isn’t an interest in real property (absent a memo of contract). Therefore the good faith purchaser without knowledge position isn’t driving things here. Title will vest.
But buyer 2 is playing with fire on a tortious interference claim. And they would have to be ready to walk from the property because once litigation starts, the sale will be bogged down beyond any period a reasonable party would be willing to deal with.