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BRIEF BYTES: Question and Answer
Forum
The purpose is to answer frequently
asked or unusual questions. Topics will range from real estate,
business, litigation and trusts and estates. Your feedback
is appreciated. Direct your comments to Cherisse Roy at croy@scott-harris.com
WHEN THE DEPOSIT
CHECK BOUNCES
 Buyers
should be made aware of the serious consequences of failure
to pay a deposit when due. Under the terms of the FAR/Bar
contract, and the terms of most other form contracts, failure
to pay a deposit is a breach which allows the seller to terminate.
Further, the default clauses in these contracts provide for
liquidated damages in an amount equal to the amount of the
deposits "paid and/or to be paid." Therefore, if
an initial deposit is paid, but the buyer fails to pay an
additional deposit when it is due, the seller can terminate
and is entitled to damages in the total amount of all the
deposits that were to be paid regardless of whether they were
actually paid.
The
consequences can even be worse if the check given for the
deposit bounces. In KEHLE V MODANSKY the court was dealing
with a deposit check in the amount of $120,000.00 which was
returned for insufficient funds. The failure of the check
was a failure to pay the deposit and therefore an automatic
breach of the contract which entitled the seller to terminate
the contract. When the seller sued, the trial court granted
the seller's motion for summary judgment and awarded $120,000
as liquidated damages pursuant to the terms of the contract
and $360,000 for treble damages as a result of appellant's
tender of a worthless check pursuant to section 68.065, Florida
Statutes. Therefore, the buyer became obligated to pay a total
of $480,000.00 as a result of the issuance of a worthless
check as the deposit under the contract.
The
buyer raised as a defense that he did not know there were
insufficient funds to pay the check. The appellate court upheld
the trial court's decision and ruled that although the lack
of knowledge that the check was not good would be a defense
to a criminal action, it was not a defense to a civil action
for treble damages under section 68.065.
The
moral to the story is that all Relators should make their
buyers aware of the need to timely pay the original and all
additional deposits, and that they should never write a check
for the deposit unless they know the check will clear.
To Contact Us, call (561)
624-3900. Or fax
(561) 624-3533. To correspond online, please fill
out our contact form with your comments.
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