Southeastern Land Fund, Inc. v. Real Estate World, Inc.

Ingram, Justice.

Certiorari was granted in this case 1 for this court to consider whether a provision in a real estate sales contract, providing for the payment of earnest money, should be considered as a provision for liquidated damages. The Court of Appeals concluded this provision was a penalty and could not be enforced.

The litigation began when the seller filed suit against the buyer who defaulted under the contract. The buyer had paid $5,000 in cash as earnest money when the contract was signed. Thereafter, a promissory note for $45,000, representing additional earnest money, was executed…