Contracts
In Arizona, a purchase agreement that includes a 'liquidated damages clause' specifying the earnest money as the seller's sole remedy:
APrevents the seller from pursuing any legal action against the buyer✓ Correct
BLimits the seller's remedy to retaining the earnest money if the buyer defaults, but does not prevent the buyer from pursuing specific performance
CAllows the seller to retain earnest money AND sue for additional damages
DHas no legal effect under Arizona law
Explanation
A liquidated damages clause specifying the earnest money as the seller's sole remedy limits the seller to that remedy upon buyer default. It prevents the seller from seeking additional damages beyond the earnest money, though the buyer may still seek specific performance if the seller defaults.
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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.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
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.
Math Concepts
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