Contracts
An Arizona REALTORS® Purchase Contract includes a default clause specifying that the seller may retain the earnest money as liquidated damages. What must the seller do to trigger this remedy?
ASimply hold the earnest money after any buyer default
BProvide written notice of default and allow the cure period to expire before claiming the earnest money as damages✓ Correct
CFile a lawsuit to have the court award liquidated damages
DImmediately list the property with another agent
Explanation
Even with a liquidated damages clause, the seller typically must provide written notice of the buyer's default and allow the contractual cure period to expire before claiming the earnest money. Proper procedure protects the seller's right to the remedy.
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