Can a Seller Sue a Buyer for Breach of Contract in Florida?

Yes, a seller can pursue a buyer who backs out of a Florida real estate contract without a valid reason. In most residential deals, though, the seller’s remedy is not an open-ended lawsuit for damages. The standard Florida contracts usually limit the seller to keeping the buyer’s deposit or asking a court to force the buyer to close. This guide from Fort Lauderdale real estate attorney Joseph Hughes explains what sellers can recover, when a buyer is allowed to walk away, and what to do first.

When Is a Buyer in Breach?

A buyer is in default when they fail to perform under the contract without a contractual right to cancel. Common examples include:

  • Refusing to close after the contingency periods have expired
  • Failing to deliver the initial or additional deposit on time
  • Not applying for financing in good faith or not giving required notices about the loan
  • Changing their mind after the inspection period has ended

When a Buyer Can Legally Walk Away

Before treating a cancellation as a breach, a seller needs to check whether the contract gave the buyer a way out. Under the standard FR/BAR contracts prepared by Florida Realtors and The Florida Bar, a buyer can generally cancel and get the deposit back:

  • During the inspection period in the “AS IS” contract, for any reason or no reason, by giving written notice before the period ends.
  • Under the financing contingency, if the buyer cannot obtain loan approval and gives proper written notice within the loan approval period.
  • Under an appraisal or other addendum, if the contract includes one and its conditions are met.
  • For condominium and HOA purchases, within the review periods tied to the association documents, including a short statutory cancellation right for many condominium resales.

Missed deadlines matter on both sides. A buyer who sends a cancellation notice one day late may be in default, and a seller who accepts a late notice without objection may lose the argument.

What the Standard Florida Contract Says About Buyer Default

If the buyer fails or refuses to perform, the default provision in the FR/BAR contracts gives the seller two choices:

  • Keep the deposit as agreed liquidated damages, in full settlement of any claims, after which both sides are released from the contract; or
  • Seek specific performance, asking the court to order the buyer to close on the contract terms.

In other words, under these standard forms a seller usually cannot keep the deposit and also sue the buyer for additional money such as a lower resale price or extra carrying costs. Florida courts generally enforce a liquidated damages clause when the seller’s actual damages were hard to predict when the contract was signed and the deposit is not grossly disproportionate to the likely loss.

When a Seller May Recover More

  • Custom or commercial contracts. Some contracts allow the seller to recover actual damages, such as the difference between the contract price and the eventual resale price, carrying costs, and other losses, instead of or in addition to the deposit.
  • Specific performance. A seller can ask a court to force the buyer to close, although this is less common because sellers usually prefer to keep the deposit and move on.
  • Attorney’s fees. The FR/BAR contracts include a prevailing-party attorney’s fees provision, so a seller who has to litigate over the deposit and wins can recover fees and costs.

Getting the Deposit Released

The deposit is normally held by an escrow agent, such as a title company, a closing attorney or a real estate broker. Escrow agents generally will not release a disputed deposit without written instructions signed by both parties or a court order. If the buyer will not sign a release, the dispute may have to be resolved through negotiation, mediation, or a court case in which the escrow agent deposits the funds with the court. Disputes over deposits held by brokers can also go through procedures overseen by the Florida Real Estate Commission.

What a Seller Should Do First

  1. Read the contract closely, including every deadline and addendum, to confirm the buyer had no right to cancel.
  2. Send a written notice of default and keep copies of every communication.
  3. Make a written demand on the escrow agent for the deposit, as the contract allows.
  4. Decide on your remedy before you relist. Signing with a new buyer is inconsistent with seeking specific performance against the first one.
  5. Talk to a real estate attorney before signing any release, especially if the deposit is large or the buyer claims a contingency.

Frequently Asked Questions

Can a seller sue a buyer for specific performance in Florida?

Yes. The standard Florida contracts allow the seller to seek specific performance instead of keeping the deposit, although most sellers choose the deposit because it is faster and less expensive.

Can a seller keep the deposit if the buyer backs out?

If the buyer had no contractual right to cancel, usually yes. If the buyer cancelled properly during the inspection period or under a contingency, the deposit generally goes back to the buyer.

How often do sellers sue buyers for breach of contract?

Less often than buyers sue sellers, because the deposit is usually the seller’s agreed remedy. Lawsuits are more common when the deposit is large, the contract is a custom or commercial agreement, or the parties disagree about whether a contingency was properly used.

Talk to a Fort Lauderdale Real Estate Attorney

For a full overview of contract disputes, see our real estate breach of contract attorney page. If the seller is the one who broke the contract, read can a buyer sue a seller for breach of contract. To protect your rights as a seller, call attorney Joseph Hughes at (954) 256-5125.