In short: Yes, if the liquidated damages clause was valid when the contract was signed. In San Francisco Distribution Center, LLC v. Stonemason Partners, LP, a buyer defaulted on a $5,250,000 Miami Beach purchase, and the seller resold the property for $200,000 more but still sued for the $400,000 deposit the contract set as liquidated damages. On April 16, 2014, the Third District affirmed summary judgment for the seller in a written opinion.
The Facts
In January 2012, San Francisco Distribution Center, LLC agreed to buy commercial property in Miami Beach from Stonemason Partners, LP for $5,250,000. The contract called for a $400,000 deposit held in escrow, though the opinion notes the buyer actually paid only $100,000 of it.
If the buyer defaulted, the seller could either keep the deposit as liquidated damages and end the contract, or sue for specific performance. If the seller kept the deposit, half went to the brokers. The buyer did not close, and its broker, who was also the closing agent, told the seller the deposit had been returned.
The seller sued. After suit was filed, it signed a contract with a new buyer on May 30, 2012 and closed on August 8, 2012 at $5,450,000. The trial court entered summary judgment for $400,000 plus interest, fees and costs. Claims against the broker remained pending in the trial court.
- The buyer conceded it was in default. It argued that because the contract also let the seller choose specific performance, the seller’s damages were ascertainable and the clause was an unenforceable penalty under Lefemine v. Baron, 573 So. 2d 326 (Fla. 1991).
- It argued the seller suffered no loss because it resold for more, so keeping $400,000 was a windfall.
- The seller answered that specific performance is not a damages remedy, that the amount was under 10 percent of the price, and that damages are judged when the contract is made, not at breach or resale. The panel asked about carrying costs, the passage of time, and the brokers’ share of the deposit.
The Decision
The Third District affirmed. On the first argument, it distinguished Lefemine, which struck down a clause letting a seller choose between the deposit and suing for actual damages. Specific performance is an equitable remedy that requires performance, not a disguised damages claim, and the court followed Mineo v. Lakeside Village of Davie, LLC, 983 So. 2d 20 (Fla. 4th DCA 2008), in holding that offering it as an alternative does not make the clause a penalty.
On the amount, the deposit was about 7.6 percent of the price. The court noted Florida decisions upholding forfeitures of 10 percent or less.
On the resale, the court held that whether damages were readily ascertainable is judged when the contract is made, citing Hutchison v. Tompkins, 259 So. 2d 129 (Fla. 1972). Measuring damages by a later sale price would ignore the parties’ bargain and invite speculation about the market after the breach. The court also noted the seller’s lost opportunity while the property was tied up, its carrying costs, and the brokers’ split of any forfeited deposit. The mandate issued May 14, 2014.
The Law
Florida enforces a liquidated damages clause when, at the time of contracting, the damages from a breach were not readily ascertainable and the agreed sum is not grossly disproportionate to the damages the parties could reasonably have expected. If either test fails, the clause is a penalty and the non-breaching party is limited to actual damages.
In real estate contracts, a deposit of up to about 10 percent of the price kept as liquidated damages has repeatedly been upheld. The contract’s election clause matters: Lefemine holds that letting the seller choose between the deposit and actual damages turns the deposit into a penalty, while this case holds that an alternative of specific performance does not.
This case was decided on summary judgment. Current law (2026): Florida’s summary judgment rule, rule 1.510, was amended effective May 1, 2021 to adopt the federal standard, which makes summary judgment somewhat easier to obtain than under the older Florida standard applied here.
Lessons
- Buyers: a resale at a higher price will not by itself get your deposit back if the clause was valid when signed.
- Read the default remedies before signing. A clause that lets the seller choose between the deposit and actual damages may be a penalty; one that offers the deposit or specific performance generally is not.
- Deposits around 10 percent or less of the price are usually treated as reasonable liquidated damages in Florida.
- Sellers: keep records of carrying costs and lost opportunities after a default. The court relied on them in rejecting the windfall argument.
Source: San Francisco Distribution Center, LLC v. Stonemason Partners, LP, No. 3D13-2320 (Fla. 3d DCA Apr. 16, 2014); ACIS docket.
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.
🔍 The Seller Resold for $200,000 More — And Still Collected $400,000 in Liquidated Damages
Read the Law on FloridaRules.net
The statutes and court rules discussed in this article, free to read on FloridaRules.net:
Go Deeper
- A $10 Million Land Deal That Never Closed: Buyer Loses on Appeal (Pine Grove v. Robert Diesel)
- Forged Financing Addendum: Who Loses the $144,000 Deposit? (Hubbell v. HH Condominium)
- When Does the 20-Day Title Objection Deadline Start? (ATS Residential v. Arthur)
Frequently Asked Questions
Can a seller keep my deposit if they sold the property to someone else for more?
Often yes. In San Francisco Distribution Center v. Stonemason Partners, the seller resold for $200,000 more and still recovered the $400,000 liquidated damages, because Florida judges the clause as of the day the contract was signed, not the later resale.
When is a liquidated damages clause an unenforceable penalty in Florida?
When damages were readily ascertainable at the time of contracting, or the agreed amount is grossly disproportionate to the expected loss. A clause letting the seller choose between the deposit and actual damages has also been held a penalty under Lefemine v. Baron.
How much of a deposit can a seller keep as liquidated damages in Florida?
There is no fixed cap, but courts have repeatedly upheld forfeitures of 10 percent of the price or less. The deposit in Stonemason was about 7.6 percent.
Does a specific performance option make a liquidated damages clause invalid?
No, according to the Third District in this case. Specific performance is an equitable remedy, not a claim for actual damages, so offering it as an alternative does not turn the deposit into a penalty.
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.
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