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Maxton Builders, Inc. v. Lo Galbo Case Brief
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Case Brief Summary & Legal Analysis
tl;dr: A buyer defaulted on a real estate contract. The New York Court of Appeals reaffirmed the long-standing rule allowing the seller to keep the 10% down payment, even if actual damages were less, refusing to treat it as an unenforceable penalty.
Legal Significance: This case solidifies New York’s common law rule that a seller may retain a defaulting buyer’s down payment (up to 10%) as damages, regardless of actual loss. It represents a significant exception to the modern trend favoring restitution for parties in breach.
Maxton Builders, Inc. v. Lo Galbo Law School Study Guide
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Case Facts & Court Holding
Key Facts & Case Background
Plaintiff Maxton Builders, Inc. contracted to sell a house to the defendants, the Lo Galbos, for $210,000. The defendants provided a $21,000 check, representing a 10% down payment. The contract contained a rider, requested by the defendants, that granted them the right to cancel via “written notice to the seller within three days” if estimated real estate taxes exceeded a certain amount. After confirming the taxes would exceed the threshold, the defendants’ attorney orally notified the plaintiff’s attorney of the cancellation within the three-day window and sent a certified letter. However, the written notice was not received by the plaintiff until after the three-day period had expired. The defendants stopped payment on the down payment check. The plaintiff subsequently sold the house to another party for the same price but incurred a $12,000 brokerage fee. The plaintiff sued to recover the $21,000 down payment, arguing the defendants breached by failing to provide timely written notice. The defendants contended their cancellation was effective and, alternatively, that the plaintiff’s recovery should be limited to its actual damages.
Court Holding & Legal Precedent
Issue: Should the court abandon the long-standing rule that allows a seller to retain a defaulting buyer’s down payment on a real estate contract, regardless of the seller’s actual damages, and instead adopt a modern rule limiting recovery to actual damages?
No. The court declined to overrule existing precedent, holding that the seller Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur a
IRAC Legal Analysis
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IRAC (Issue, Rule, Analysis, Conclusion) is the exact format professors want to see in your exam answers. Our exclusive Flash-to-Full briefs combine holding, analysis, and rule statements formatted to match what A+ students produce in exams. These structured briefs help reinforce the essential legal reasoning patterns expected in law school.
Legal Issue
Should the court abandon the long-standing rule that allows a seller to retain a defaulting buyer’s down payment on a real estate contract, regardless of the seller’s actual damages, and instead adopt a modern rule limiting recovery to actual damages?
Conclusion
The decision firmly entrenches the Lawrence v. Miller rule in New York Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris ni
Legal Rule
In New York, a vendee who defaults on a real estate contract Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi
Legal Analysis
The court first addressed the breach, holding that when a contract requires Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation
Flash-to-Full Case Opinions
Flash Summary
- A seller may retain a defaulting buyer’s entire down payment (here,