Contracts
What is 'earnest money forfeiture' in an Idaho real estate transaction?
AThe automatic transfer of earnest money to the title company
BThe right of the non-defaulting party (usually the seller) to retain the earnest money as liquidated damages when the other party (buyer) breaches✓ Correct
CA penalty charged by IREC for failed transactions
DThe return of earnest money to the buyer at closing
Explanation
Earnest money forfeiture occurs when the buyer defaults and the seller retains the earnest money as the agreed liquidated damages for the breach. The purchase contract should specify whether forfeiture is the seller's exclusive remedy or if additional damages are available.
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