Contracts
In an Arizona purchase contract, 'liquidated damages' clauses that designate the earnest money as the seller's remedy for buyer default:
AAre unenforceable in Arizona
BAre enforceable if the amount represents a reasonable pre-estimate of actual damages and is not a penalty, providing the seller a fixed remedy while capping the seller's recovery at the earnest money amount✓ Correct
CAutomatically entitle the seller to twice the earnest money
DOnly apply if the buyer defaults after the inspection period
Explanation
Arizona courts enforce liquidated damages clauses in real estate contracts when the amount is a reasonable estimate of actual damages (not an unconscionable penalty). When the earnest money is designated as liquidated damages, the seller's remedy is limited to that amount, but the seller doesn't need to prove actual damages.
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