Contracts
What is a 'liquidated damages' clause in an Illinois real estate contract?
AA clause requiring the breaching party to pay actual damages plus attorney fees
BA pre-agreed amount specified in the contract as compensation for breach, typically the earnest money for a buyer default✓ Correct
CA clause allowing the non-breaching party to choose between damages and specific performance
DA clause requiring mediation before any damages can be sought
Explanation
A liquidated damages clause pre-determines the amount of compensation for breach. In Illinois real estate contracts, the earnest money is often designated as liquidated damages, meaning if the buyer defaults, the seller keeps the earnest money as their sole remedy.
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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.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
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.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Math Concepts
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