Contracts
Liquidated damages in a real estate contract refer to:
ADamages paid by the broker if the deal falls through
BA pre-agreed amount of damages that the breaching party will pay if they fail to perform✓ Correct
CCourt-ordered damages calculated after a breach
DThe earnest money returned to the buyer after a successful closing
Explanation
Liquidated damages are a pre-agreed, specified sum that one party pays the other if they breach the contract. In real estate, the earnest money deposit often serves as liquidated damages: if the buyer defaults, the seller keeps the earnest money as the agreed-upon remedy. This must be a reasonable estimate of actual damages.
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