In short: The seller won. In Dirico v. Redland Estates, the Third DCA held that deposits the contract addenda said were released to the seller as payment for closing extensions were the seller’s to keep, not credits toward the price. It reversed a roughly $1.3 million judgment for the buyer and ordered judgment for the seller.
The Facts
In 2002 the seller agreed to sell about 92 acres to Redland Estates, Inc. for $3.8 million. Over the next year the parties signed three addenda pushing back the closing date and raising the price to $4.5 million.
The second addendum said the existing deposit would be released and paid to the seller as consideration for that extension, and required a new $250,000 non-refundable deposit. The third addendum said the $250,000 would be released to the seller immediately as payment for the extension, and required $200,000 more in monthly installments that would be credited to the buyer at closing.
At closing the buyer claimed credit for every dollar it had put up, about $688,000. The seller said only the $200,000 in monthly installments counted as a credit. The trial court sided with the buyer, awarding about $1.3 million including interest, and also ordered the seller to turn over a $95,000 real estate commission.
The Decision
The Third District reversed in an opinion by Judge Logue. It found the addenda unambiguous. Money released to the seller as consideration for, or as payment for, an extension became an extension payment, not a deposit held toward the price. Three points drove the result: the addenda used payment-for-extension language; each time old money was released, the buyer had to post new money, showing the released funds no longer secured performance; and only the monthly installments carried express language making them a closing credit.
Because the contract was clear, the court would not read in a different meaning. It reversed the buyer’s judgment and the $95,000 commission award and remanded for entry of judgment for the seller.
The Law
Florida courts enforce clear contract language as written. When the words are unambiguous, the court applies their plain meaning and does not consider outside evidence of what a party says it intended. Courts also read a contract as a whole, so a term used in one place (such as an express closing credit) affects how a different term elsewhere is read.
In real estate deals, a deposit is normally held in escrow as security for performance and credited to the price at closing. An extension fee is the price of more time and normally belongs to the seller once paid. Labels matter less than the operative words: whether the money is released to the seller, whether it is described as consideration for the extension, and whether the contract says it will be credited at closing.
Lessons
- Buyers asking for extensions should state in writing whether released money will be credited at closing. Silence on that point can cost you.
- Sellers can protect extension money by calling it consideration for the extension and replacing it with a new deposit.
- Release of escrowed funds to the seller is a strong signal the money is no longer a deposit.
- Read every addendum together; courts compare the language across documents to decide what each payment was.
Source: Dirico v. Redland Estates, Inc., No. 3D12-3132 — Fla. 3d DCA (May 7, 2014).
Watch the Oral Argument
This is the recording of the actual oral argument, posted on the channel. What lawyers and judges say at argument is not the ruling; the decision is summarized above.
Extension Payments or Deposits? Real Estate Deposit Fight | DiRico v. Redland Estates, 3D12-3132
Go Deeper
- Florida's Summary Judgment Rule: How Rule 1.510 Ends Cases Without a Trial
- How Appeals Work in Florida: The 30-Day Deadline, Costs, and What a PCA Means
Frequently Asked Questions
Is an extension fee credited to the purchase price in Florida?
Only if the contract says so. In Dirico v. Redland Estates, money the addenda released to the seller as payment for closing extensions was held to be the seller’s to keep, while monthly payments the addendum expressly called closing credits were credited. The specific wording controls.
What is the difference between a deposit and an extension payment in a real estate contract?
A deposit is security for the buyer’s performance, usually held in escrow and applied to the price at closing. An extension payment is what the buyer pays for more time to close and typically belongs to the seller. Courts look at whether the money was released to the seller and whether the contract promises a closing credit.
Can a seller keep a released escrow deposit if the closing is extended?
If the addendum releases the deposit to the seller as consideration for the extension and does not promise a credit, Florida courts may treat it as the seller’s money. In Dirico, the Third DCA so held and reversed a judgment requiring the seller to credit those funds.
Does a Florida court look at what the parties meant if the contract is clear?
No. When contract language is clear and unambiguous, Florida courts apply its plain meaning and do not rely on outside evidence about intent. Evidence of intent comes in only if the language is genuinely ambiguous. Dirico v. Redland Estates applied this rule to reverse a judgment that had treated extension payments as closing credits.
Talk to a Florida real estate litigation lawyer
Weidner Law, P.A. handles Florida real estate disputes, title problems and appeals from St. Petersburg. If you need a real estate litigation lawyer, call (727) 954-8752 or email weidner@mattweidnerlaw.com.
Read the law yourself, free: every Florida statute and court rule is on floridarules.net.
This article is general information about Florida law, not legal advice about your situation. Reading it, watching the videos, or contacting the firm does not create an attorney-client relationship. Every case turns on its own facts, and past results do not guarantee a similar outcome. The hiring of a lawyer is an important decision that should not be based solely upon advertisements.
