If you signed a contract to purchase a pre-construction condominium in Florida but later failed to close, you may already be facing the loss of a substantial deposit. Then another concern arises:
Can the developer keep your deposit and still sue you for additional damages?
The answer depends heavily on the language of your purchase contract.
Many Florida pre-construction contracts contain detailed default provisions specifying what happens when a buyer fails to close. In some contracts, retaining the buyer's deposit is the developer's agreed remedy. Other contracts may give the developer alternative remedies, potentially including the right to pursue actual damages or other relief.
That distinction can become extremely important when hundreds of thousands of dollars are at stake.
Can a Florida Developer Keep My Deposit If I Default?
Potentially, yes.
Florida Statute § 718.202 governs deposits paid to developers in connection with condominium purchases before closing. Among other things, the statute provides that when a buyer defaults on obligations under the purchase and sale contract, certain escrowed funds may be paid to the developer.
But that does not necessarily answer how much money the developer is ultimately entitled to retain or whether the developer can pursue additional damages.
Those questions may require careful analysis of:
- The purchase and sale contract;
- The contract's buyer-default provision;
- Any liquidated-damages provision;
- The developer's available remedies;
- Whether the remedies are exclusive or alternative;
- The amount and status of the buyer's deposits;
- Whether the developer properly declared the buyer in default;
- What happened to the condominium after the alleged default;
- Whether the developer subsequently sold or attempted to sell the unit; and
- Whether the developer actually suffered damages.
The contract is therefore often the starting point in determining the financial consequences of a buyer's failure to close.
Can the Developer Keep My Deposit AND Sue Me?
Possibly—but the developer does not automatically have the right to do both.
One of the first questions a Florida real estate deposit attorney should examine is whether the contract makes retention of the deposit the developer's liquidated damages remedy or allows the developer to pursue some other remedy.
For example, a contract might provide that following a buyer's default, the developer may terminate the agreement and retain the buyer's deposits as liquidated damages.
If the developer chooses that remedy, an important legal question may arise:
Does retaining the deposit satisfy the developer's damages claim, or does the contract also permit the developer to pursue the buyer for additional money?
The precise wording of the contract matters.
A developer generally should not be assumed to have unlimited rights merely because a buyer failed to close. The parties' contractual remedies must be analyzed before determining what the developer can recover.
What Are Liquidated Damages?
Liquidated damages are an amount the parties agree in advance may serve as compensation if one party breaches the contract.
In the pre-construction condominium context, the buyer's deposit may sometimes function as the agreed liquidated damages if the buyer defaults.
This can provide certainty to both sides.
Instead of litigating over exactly how much the developer lost because the buyer did not close, the contract may establish the deposit as the agreed measure of damages.
This distinction can be extremely important.
If the contract establishes retention of the deposit as the developer's exclusive or elected remedy, there may be a substantial argument against allowing the developer to keep the deposit and recover additional damages arising from the same default.
The outcome, however, depends on the contract and applicable Florida law.
What If the Contract Gives the Developer a Choice of Remedies?
Some contracts are more complicated.
The default provision may give the developer different options after a buyer fails to close. For example, depending on the contract, the developer might be permitted to choose between:
- Terminating the contract and retaining deposits as liquidated damages; or
- Pursuing another contractual remedy.
If the remedies are alternatives, the developer's conduct after the alleged default can become important.
Did the developer terminate the contract?
Did it demand the escrowed deposits?
Did it expressly elect liquidated damages?
Did it subsequently attempt to sell the condominium to someone else?
Did it sell the unit for the same price—or perhaps even a higher price?
Those facts may affect the developer's damages claim and should be investigated.
What Damages Might a Developer Claim?
If the contract permits the developer to pursue actual damages, the developer may attempt to claim financial losses allegedly resulting from the buyer's breach.
The claimed damages could potentially involve the difference between the original contract price and the amount ultimately received for the unit, carrying expenses, resale expenses, or other amounts permitted under the contract and Florida law.
But a developer's demand is not necessarily proof of damages.
The developer may have to establish both the legal basis for the claimed damages and the amount of those damages.
That can create significant factual issues.
What If the Developer Resold the Condo?
The resale of the unit can be an important part of the analysis.
Consider a hypothetical example.
A buyer agrees to purchase a pre-construction condominium for $2 million and pays a $400,000 deposit. The buyer later fails to close.
The developer retains the $400,000 deposit.
Suppose the developer subsequently sells the same condominium to another purchaser for $2.1 million.
If the developer then attempts to sue the original buyer for additional damages, an obvious question arises:
What additional financial loss did the developer actually suffer from the failed transaction?
The answer will depend on the contract and the facts, but the subsequent disposition of the property may be highly relevant to a damages analysis.
What If the Developer Has Not Resold the Unit?
That situation may require a different analysis.
The developer may contend that the buyer's default caused a measurable financial loss. But the developer's calculation should not simply be accepted without scrutiny.
A lawyer representing the buyer may investigate questions such as:
- When was the unit placed back on the market?
- At what price?
- What efforts were made to find another buyer?
- Were comparable units being sold?
- Did market values increase or decrease?
- Did the developer receive other offers?
- Was the unit eventually sold?
- What expenses does the developer attribute specifically to the buyer's default?
- Has the developer already recovered some or all of its alleged loss through the retained deposit?
These issues can become central when a developer seeks damages beyond the money it already received.
Does a Developer Have to Mitigate Its Damages?
Mitigation can become an important issue when a party seeks actual damages for breach of contract.
A buyer facing a damages claim may want to examine what the developer did after the alleged default to reduce or avoid its claimed losses.
For example, if a valuable condominium could have been resold but remained off the market for an extended period, the circumstances surrounding that decision may deserve scrutiny.
Likewise, a developer should not necessarily be able to attribute every subsequent carrying cost or market loss to the original buyer without establishing the required legal and factual connection.
The availability and scope of a mitigation defense will depend on the contract, the remedy pursued, and applicable Florida law.
What If the Developer Kept a Very Large Deposit?
Pre-construction condominium deposits can be substantial.
A buyer purchasing a $3 million condominium might have hundreds of thousands of dollars tied up in deposits before closing.
Florida's Condominium Act contains specific rules governing pre-closing deposits. Under Florida Statute § 718.202, payments up to 10% of the sale price are generally subject to statutory escrow requirements before substantial completion. Payments exceeding that initial 10% are also subject to special escrow provisions, although the statute permits certain excess funds to be withdrawn for construction and development costs when the contract provides for it and statutory requirements are satisfied.
The size of the deposit makes it especially important to examine whether the developer complied with the contract and Florida condominium law before assuming that the money was properly forfeited.
The Developer's Right to the Deposit Is Not Always Automatic
A buyer who failed to close should not automatically conclude:
"I defaulted, so the developer gets everything."
There may be other issues affecting the developer's entitlement to the deposit.
For example, Florida Statute § 718.202 provides that failure to comply with certain statutory deposit requirements can render the contract voidable by the buyer and, if properly voided, require deposited or advanced sums to be refunded with interest.
Florida condominium purchasers may also have statutory cancellation rights associated with required developer disclosures and certain material adverse amendments to the offering. Florida Statute § 718.503 contains important disclosure and voidability provisions applicable to developer sales.
Depending on the circumstances, potential issues may therefore include:
- Whether the developer complied with statutory escrow requirements;
- Whether required condominium documents were timely provided;
- Whether the developer materially changed the condominium offering;
- Whether the buyer had a contractual or statutory right to terminate;
- Whether the developer properly declared a default;
- Whether contractual conditions for forfeiture were satisfied; and
- Whether the developer itself breached the purchase agreement.
The existence of a buyer default should therefore be analyzed rather than assumed.
What If I Receive a Demand Letter From the Developer?
Do not ignore it.
A demand letter seeking money beyond your deposit may signal that the developer intends to pursue additional damages.
Before responding or making admissions, consider having a Florida attorney familiar with pre-construction condominium deposit disputes review the contract and the developer's demand.
Important questions may include:
What remedy does the contract actually provide?
Has the developer already elected to retain the deposit as liquidated damages?
Does the contract permit additional damages after that election?
How has the developer calculated its claimed loss?
What happened to the condominium after the alleged default?
Does the buyer have defenses or affirmative claims against the developer?
These questions can materially change the buyer's potential exposure.
Can I Fight the Developer's Lawsuit?
Potentially.
A buyer's defenses will depend on the contract and facts, but a lawsuit seeking additional damages should not automatically be treated as a valid debt.
Potential defenses or issues may involve the developer's election of remedies, liquidated damages, contractual limitations on remedies, failure to satisfy conditions precedent, mitigation, calculation of damages, statutory violations, the developer's own breach, or the buyer's right to terminate the agreement.
In some cases, the buyer may also have an affirmative claim seeking the return of some or all of the deposit.
Can I Sue the Developer to Get My Deposit Back?
Depending on the circumstances, yes.
A buyer may have grounds to seek the return of a pre-construction deposit if the developer was not legally entitled to retain it.
Florida law provides significant protections surrounding condominium developer transactions. For example, § 718.202 regulates pre-closing deposits and provides a potential voidability remedy for certain violations, while § 718.503 establishes disclosure and cancellation requirements for developer sales.
Florida law also provides remedies for purchasers who reasonably relied on materially false or misleading information published under a developer's authority in specified advertising and promotional materials. Florida Statute § 718.506 may permit rescission or damages under qualifying circumstances.
A detailed contract and document review may therefore reveal that the real dispute is not whether the developer can collect more money—but whether the developer was entitled to keep the deposit in the first place.
Documents to Gather If a Developer Is Threatening to Sue You
If you are involved in a Florida pre-construction deposit dispute, preserve the documents connected with the transaction, including:
- The signed purchase and sale agreement;
- All amendments and addenda;
- The condominium prospectus and offering documents;
- Deposit receipts and wire confirmations;
- Escrow communications;
- Developer notices;
- Default notices;
- Closing notices;
- Emails and text messages with the developer, broker, or sales representatives;
- Marketing materials you received before signing;
- Documents reflecting changes to the project;
- Cancellation or termination notices; and
- Any demand letter or lawsuit received from the developer.
These documents can help determine whether the developer is entitled to the deposit and whether it has any legitimate claim for additional damages.
Frequently Asked Questions
Can a Florida condo developer keep my deposit and sue me for more money?
Possibly, depending on the contract and circumstances. The key issue is whether the purchase agreement permits additional damages or instead makes retention of the deposit the developer's applicable liquidated-damages remedy.
If the developer kept my entire deposit, does that end the case?
Not necessarily. The contract must be reviewed to determine the legal effect of retaining the deposit. However, if the developer elected an exclusive liquidated-damages remedy, that may provide an important defense to a claim for additional damages.
Can the developer sue me for the entire purchase price?
A developer can assert claims it believes are authorized by the contract and law, but that does not mean the developer will prevail. The available remedies, damages, subsequent disposition of the property, and defenses must be evaluated.
Does it matter if the developer sold my unit to someone else?
It can. A subsequent resale may be highly relevant when evaluating actual damages, particularly if the developer seeks compensation beyond a deposit it already retained.
What if the condo sold for more than my contract price?
That fact could be important to determining whether the developer actually suffered the damages it claims, although the specific contract terms and circumstances remain critical.
Can I demand my deposit back even though the developer says I defaulted?
Potentially. A developer's declaration of default does not necessarily resolve whether the default was valid or whether the developer complied with the contract and applicable Florida law.
Should I hire a lawyer if the developer threatens to sue me?
When a substantial deposit or additional damages are at stake, obtaining a legal review before responding can be important. Pre-construction contracts can contain sophisticated default and remedy provisions that materially affect the parties' rights.
Speak With a Florida Real Estate Deposit Dispute Attorney
If a Florida developer has kept your deposit and is now demanding additional money, you should not assume the developer is automatically entitled to both.
The purchase agreement, default provision, liquidated-damages language, developer's election of remedies, subsequent handling of the unit, and actual damages may all need to be examined.
J.P. Gonzalez-Sirgo, P.A. represents buyers in Florida real estate deposit disputes, including disputes involving pre-construction condominium contracts, buyer defaults, forfeited deposits, and claims for the return of substantial deposits.
If a developer has retained your deposit, threatened legal action, or sued you for additional damages after you did not close, contact J.P. Gonzalez-Sirgo, P.A. for a consultation regarding your rights and potential defenses.
Contact Florida Attorney J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Miami Attorney Gonzalez-Sirgo directly at jp@yourattorneys.com or by text at (305) 929-8935.
This article is for informational purposes only and does not constitute legal advice.
