Timney

In the published portions of this opinion, we hold that an illegal forfeiture provision is unenforceable, even if the illegal provision is included in a settlement agreement.

This is an appeal from a ruling by the trial court on a motion to enforce a settlement agreement under Code of Civil Procedure section 664.6. Appellants Susan Timney and Lynda Kretlow contend the forfeiture of their deposit of $31,250 on a proposed real property sale, in accordance with a provision in the settlement agreement, constituted an illegal forfeiture. We agree and reverse.

I. Facts and Procedural History

In the original litigation, appellants sought specific performance of an agreement to buy the home they had been renting from the respondents, the Lins. The originally contemplated sale could not go through, because a 25 percent interest in the property was held by Lih-Yung Chang (Chang), who lived in Taiwan, and was unwilling to sell her interest. In the ensuing litigation, the Lins also filed a cross-complaint for indemnity against Chang.

Appellants and the Lins subsequently entered into a written settlement agreement, which provided for the Lins to sell their 75 percent interest in…