Stonebraker v. Zinn
Supreme Court of Appeals of West Virginia
286 S.E.2d 911 (W. Va. 1982)
The Zinns (defendants) contracted to sell a $25,000 house to the Stonebrakers (plaintiffs) under an installment land contract requiring a $1,500 down payment and $189.09 monthly payments, with a clause providing that any amounts already paid would be retained as liquidated damages if the Stonebrakers abandoned the property. After about a year in the house, having paid the down payment plus twelve monthly installments, the Stonebrakers told the Zinns they could no longer afford the payments and vacated.
Whether a liquidated damages clause awarding the seller of a property under an installment land contract fair monthly rental plus a down payment equaling six percent of the purchase price constitutes an invalid penalty clause.