With new home sales slumping, and many buyers backing out their contracts even at the cost of losing their deposits for fear of losing even more money as the bubble deflates, builder Brookfield Homes has a great idea: threaten not simply to keep cold-footed buyers' deposits, but to sue them for the difference between the price they contracted for and the price the house actualy sells for: "Some buyers could find themselves on the hook for more than their initial down payment. If a house is resold for less than the original purchase price, 'we are able to go back to the initial purchaser and recoup some of the losses we had there,' says Mr. Hughes of Brookfield Homes." Yep, that will inspire new buyers to put down new deposits [clarification: given that it's both terrible customer relations, and also that it implies that Brookfield's poobahs believe that the value of the homes they've sold on spec is rapidly plummeting, or soon will rapidly plummet].

UPDATE: Of course it's true that many real estate speculators treated nonrefundable earnest money like a call option on rising real estate prices, and I wouldn't feel much sympathy for such a speculator who failed to anticipate (either because he didn't know the law, or because he assumed prices would rise forever) that he could be liable for expectancy damages as well. But it's also hard to feel sympathy for builders facing mounting cancellations: the builders knew rampant speculation was going on in many markets, and could have avoided the problem by only selling homes at or near completion.