Star Financial Corp. v. Howard Nance Co. , 131 N.C. App. 674 ( 1998 )

HORTON, Judge.

The issue on appeal is whether the buyer under a contract to purchase real estate, who does not comply with the terms of the contract, may recover the amounts paid to the seller prior to the buyer’s breach. North Carolina follows the common law rule, which is the majority American view, that a defaulting buyer may not recover any portion of consideration paid prior to his breach.

It is settled law that where a party agrees to purchase real estate and pays a part of the consideration therefor and then refuses or becomes unable to comply with the terms of his contract, he is not entitled to recover the amount theretofore paid pursuant to its terms.

Scott v. Foppe, 247 N.C. 67, 70, 100 S.E.2d 238, 240 (1957).

In Walker v. Weaver, 23 N.C. App. 654, 209 S.E.2d 537 (1974), this Court applied the holding of Scott and held that the trial court was correct in awarding the seller a $500.00 “part payment on the purchase price” made by the buyer under a contract to purchase real estate where the buyer had defaulted under the contract. We note that there was no forfeiture provision in the real estate contracts involved in Scott and Walker, nor were the amounts paid in those cases referred to as either earnest money or liquidated damages. In both cases, as in the case sub judice, the amounts paid were to be applied to the total purchase price. Thus, in the present case, the trial court correctly entered summary judgment for the seller. Plaintiff buyer, having breached the real estate sales contract, was not entitled to recover the amounts paid prior to its breach.

We are aware that the common law rule has been criticized in some jurisdictions as being inequitable where the amount forfeited is more than the seller’s actual damages resulting from the breach. See Walker, 23 N.C. App. at 656, 209 S.E.2d at 539. That may be the situation in the instant case. However, it is not for this Court to depart from a rule that our Supreme Court has described as “settled law.”

For the foregoing reasons, the decision of the trial court is

Affirmed.

Judge LEWIS concurs. Judge GREENE dissents.