Luxury Homes and Estates of Florida,There appears to be a misconception that a deposit must be made by a buyer of real estate to seal the deal. The Standard Contract for Sale and Purchase often requires a deposit be paid, however, the failure of the buyer to deliver the deposit does not render the contract unenforceable.
On the contrary, in the case of Peterson Homes, Inc. v. Johnson, 691 So.2d 563 (Fla. 5th DCA 1997) the court ruled that the promise to purchase property creates a binding contract even though the purchaser has paid no earnest money deposit.
In Peterson Homes, the buyer signed a contract to purchase a home for $1.1 million. The buyer was required to pay a $600,000 deposit into escrow. Peterson Homes accepted the contract, however, the buyer neither paid the deposit nor attended the closing.
Peterson Homes filed suit and claimed breach of contract.
The trial court denied the claim on the grounds that the contract lacked consideration because the buyer failed to deliver the deposit.
Evidently the trial court reasoned that a buyer can sign a contract and elect not to deliver the deposit which effectively voids same.
The 5th DCA made short shrift of this argument. No part of the contract required that the earnest money deposited be paid at the time the agreement was signed. Therefore, the contract was not contingent upon the delivery of the deposit.
A signature on a contract is all that is required to have a legal and binding promise to purchase.
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Houston Short grew up in the Central Florida area, and continues to reside in Orlando with his family. He provides representation in arbitration actions for the American Arbitration Association and engages in alternative dispute resolutions including mediation both binding and non-binding arbitration, and settlement negotiations. He is an active member of the American Arbitration Association Panel Review Committee, the Orange County Bar Association, and the Florida Bar. He graduated from Florida State University in 1984 with a bachelors of science degree (cum laude) and received his juris doctor from the University of Florida in 1987 (with honors). Houston co-authored, "The Constitutionality of the Legislatures Mandate to Sever Counterclaims in Mortgage Foreclosure Action," the Real Property, Probate and Trust Law Section, The Florida Bar.
