Contracts
In Delaware, what is an 'earnest money deposit' (EMD) and what happens to it if the buyer defaults?
AA deposit to reserve a property for showing; it is always returned upon buyer cancellation
BA good-faith deposit demonstrating the buyer's intent to purchase; if the buyer defaults without contractual justification, the seller may be entitled to keep the earnest money as liquidated damages✓ Correct
CA deposit held by the Delaware Real Estate Commission
DA deposit required only for new construction purchases in Delaware
Explanation
Earnest money is a good-faith deposit showing the buyer's serious intent to purchase. If the buyer defaults without a valid contractual excuse, the seller may be entitled to retain the earnest money as liquidated damages (pre-agreed compensation for breach), as specified in the purchase agreement.
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