Contracts
A buyer defaults on a purchase contract in Alaska. If the contract contains a liquidated damages clause limited to the earnest money, the seller's remedy is:
ATo sue for the full purchase price
BTo retain the earnest money as agreed liquidated damages✓ Correct
CTo seek specific performance in court
DTo relist the property at no cost to the buyer
Explanation
A liquidated damages clause specifies in advance the amount of damages recoverable upon default. If limited to the earnest money, the seller agrees to accept the deposit as full compensation for the buyer's default and waives the right to sue for additional damages.
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Key Terms to Know
Earnest Money
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
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