DANIEL LEFEMINE AND CATHERINE A. LEFEMINE, APPELLANTS,
v.
JUDITH W. BARON AND S & N KURASH, INC., APPELLEES
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This case addresses whether a default provision in a real estate contract requiring retention of the buyer's deposit constitutes enforceable liquidated damages or an unenforceable penalty clause. The trial court upheld the provision as liquidated damages, and the appellate court affirmed, finding the 10% deposit retention reasonable and not unconscionable under the circumstances.
The default provision is enforceable as liquidated damages. A deposit of 10% of the purchase price ($38,500 of $385,000), with half payable to the broker, is not unconscionable and does not constitute an unenforceable penalty under Florida law.
[1] A real estate contract provision allowing a seller to retain a buyer's deposit upon the buyer's default is enforceable as liquidated damages if it is not unconscionable.
[2] A deposit of ten percent of the purchase price, with half of that amount payable to a real estate broker, is not unconscionable as liquidated damages.
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Join FLexlaw to unlock all legal intelligence“If buyer fails to perform the Contract within the time specified, the deposit(s) made or agreed to be made by Buyer may be retained or recovered by or for the account of Seller as liquidated damages, consideration for the execution of the Contract and in full settlement of any claims”
Sets forth the operative default provision at issue, establishing the seller's right to retain deposits as liquidated damages upon buyer default
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Join FLexlaw to unlock all legal intelligenceThe parties entered into a real estate purchase and sale agreement with a purchase price of $385,000. The buyer defaulted on the contract by failing t…
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LETTS, Judge.
The question now before this court is whether the default provision in a real estate contract, calling for retention of the deposit by the seller, was enforceable as liquidated damages or was an unenforceable penalty clause. The trial court upheld the provision as one for liquidated damages. We affirm. The default provision contained the following language:
DEFAULT:
1. DEFAULT BY BUYER: If buyer fails to perform the Contract within the time specified, the deposit(s) made or agreed to be made by Buyer may be retained or recovered by or for the account of Seller as liquidated damages, consideration for the execution of the Contract and in full settlement of any claims; whereupon all parties shall be relieved of all obligations under the Contract; or Seller, at his option, may proceed at law or in equity to enforce his rights under the Contract.
2. DEFAULT BY SELLER: If, for any reason other than failure of Seller to make title marketable after diligent effort, Seller fails, neglects or refuses to perform the Contract, all deposit(s) made by Buyer shall be returned upon demand; or Buyer, at his option, may proceed at law or in equity to enforce his rights under the Contract.
There is no question that the buyer defaulted and we find nothing offensive in the language quoted. In our view, it is enforceable under Hutchinson v. Tompkins, 259 So. 2d 129 (Fla.1972); Hooper v. Breneman, 417 So. 2d 315 (Fla. 5th DCA 1982); Bruce Builders, Inc. v. Goodwin, 317 So. 2d 868 (Fla. 4th DCA 1975). We might draw the opposite conclusion if the deposit amount forfeited was unconscionable. However, under the terms of the instant contract, only ten percent of the $385,000 purchase price was retained by the seller and one-half of that had to be paid to the real estate broker for his services. That is not to say that $38,500 is anything but a substantial sum. Yet, it is not unconscionable under the facts here presented.
The appellant cites us to Cortes v. Adair, 494 So. 2d 523 (Fla. 3d DCA 1986), and, frankly, we are not sure what to make of that decision which never discusses or distinguishes Hutchinson, Hooper or Bruce Builders. Moreover, Cortes does not set forth what would happen under the contract, which it interpreted, if the seller defaulted. In any event, to the extent that it is in conflict with our conclusion in the case sub judice, we reject the rationale of Cortes. It is true that this court cited Cortes in the recent case of Terraces of Boca Associates v. Gladstein, 543 So. 2d 1303 (Fla. 4th DCA 1989). However, the Terraces holding clearly was based on the “unreasonable disparity in remedy alternatives available to seller and buyers.” Id. at 1304. See also Ocean Dunes of Hutchinson Island Development Corp. v. Colangelo, 463 So. 2d 437 (Fla. 4th DCA 1985). No such disparity is found in the purchase and sale agreement at bar. AFFIRMED.
WARNER, J., and KANAREK, PAUL B., Associate Judge concur.
Cases With Similar Vibessemantic neighbors from the corpus
Citator
Cited By
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Lefemine v. Baron, 573 So. 2d 326 (Fla. 1991)…GRIMES, Justice. We review Lefemine v. Baron, 556 So. 2d 1160 (Fla. 4th DCA 1990), based upon express and direct conflict with Cortes v. Adair, 494 So. 2d 523 (Fla. 3d DCA 1986). We have jurisdiction pursuant to article V, section 3(b)(3) of the Florida Constitution. Daniel and Catherine Lefemine entered into…
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Idevco, Inc. v. Hobaugh, 571 So. 2d 488 (Fla. 2d DCA 1990)…s- were entitled to the return of their deposit, even though they breached the agreement. See Clone, Inc. v. Orr, 476 So. 2d 1300 (Fla. 5th DCA 1985); Terraces of Boca Assocs. v. Gladstein, 543 So. 2d 1303 (Fla. 4th DCA 1989). Cf. Lefemine v. Baron, 556 So. 2d 1160 (Fla. 4th DCA), jurisdiction accepted, 564 So. 2d 487 (Fla.1990) (default provisions of condominium purchase agreement were not disparate in remedies available to buyer and seller). We also conclude that the circuit court did not depart from the es…
Authorities Cited
- Hutchison v. Tompkins, 259 So. 2d 129 (Fla. 1972)
- Bruce Builders, Inc. v. Goodwin, 317 So. 2d 868 (Fla. 4th DCA 1975)
- Ocean Dunes of Hutchinson Island Dev. Corp. v. Colangelo, 463 So. 2d 437 (Fla. 4th DCA 1985)
- Tidwell v. The Southland Corp., 417 So. 2d 315 (Fla. 1st DCA 1982)
- Augusto Cortes and Mary Cortes v. Adair, 494 So. 2d 523 (Fla. 3d DCA 1986)
- Terraces OF Boca Assocs. v. Ansel Gladstein and Ruth R. Gladstein, 543 So. 2d 1303 (Fla. 4th DCA 1989)