FL Caselaw Update: Buyer entitled to return of deposit ...

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Buyer was entitled to return of deposit for Seller’s failure to fulfill conditions to closing

Bruce Stein, Appellant, v. David Howell, Appellee

4th District, Case No. 4D04-3586, September 19, 2007


Buyer and Seller entered into a contract regarding commercial property. The contract provided that “in the event any condition of this Contract is not met Buyer’s deposit will be returned in accordance with applicable Florida laws and regulations.” A first addendum to the contract provided that the parties would share the cost of an environmental study. A second addendum stated that “the closing is contingent upon a clear Phase I environmental study” and ineffectively attempted to amend the default provisions of the contract with the inclusion of a liquidated damages clause.

Like all good closings, there is a twist. The Phase I showed petroleum contamination. The Buyer refused to close and Seller kept the deposit and the parties ended up in court.

The lower court ruled in favor of Seller and allowed him to keep the deposit as damages for Buyer’s failure to close. The 4th DCA reversed in this case. The reasoning behind the reversal is that because the second addendum specifically made “a clear Phase I environmental study” a condition to closing, Seller did not fulfill all of his closing obligations and Buyer was entitled to a return of his deposit.

It is important to note that while the Seller had no control over the outcome of the environmental study, he was still on the hook for its results because of the language in the addendum. This is yet another reason why 1) you should read every last word before you sign a document, and 2) you should hire an attorney.


Comments (1)

Chrissi Zaccheo Ewing
Florida Sun & Surf - Jensen Beach, FL
True, recommending an attorney is good.
Sep 21, 2007 03:20 AM