Contracts
Under Illinois law, if a buyer fails to close on a real estate contract, the seller's remedy of retaining the earnest money deposit is known as:
ASpecific performance
BCompensatory damages
CLiquidated damages✓ Correct
DRescission
Explanation
When a contract specifies that the earnest money deposit will be retained by the seller if the buyer defaults, this is a liquidated damages clause. Illinois courts generally enforce liquidated damages clauses in real estate contracts as long as the amount is a reasonable estimate of actual damages and not a penalty. The seller may also seek specific performance (court order to complete the sale) or actual damages, depending on the contract terms.
Related Illinois Contracts Questions
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