Forfeiture Clauses in Florida Contracts
A forfeiture clause specifies the consequences of contract breach, typically providing that the breaching party loses deposits, rights, or property. In Florida real estate, forfeiture most commonly applies to earnest money deposits.
Common Applications
- Earnest money: Seller retains deposit if buyer defaults
- Lease forfeiture: Tenant loses leasehold for breach
- Option forfeiture: Buyer loses option payment for failure to exercise
- Installment contract: Buyer loses payments and possession for default
Enforceability
- Forfeited amount must be reasonable relative to anticipated damages
- Must be freely negotiated (not unconscionable)
- Cannot be punitive in nature
- Actual damages must be difficult to calculate
- 3-10% of purchase price generally considered reasonable for earnest money
Forfeiture vs. Liquidated Damages
Both specify predetermined breach consequences. Liquidated damages fix a dollar amount; forfeiture involves loss of property or rights. Courts apply equitable review to both and may decline enforcement if the result is unjust.
Related Terms
- Contract — The agreement containing the clause
- Earnest Money — The most common forfeited item
- Equity — Equitable review of forfeiture
Barnes Walker Contract Law
Barnes Walker's attorneys draft and enforce forfeiture provisions in Florida contracts, balancing protection with enforceability. Request a legal inquiry for assistance.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC