Contracts
In Louisiana, 'earnest money forfeiture' occurs when a buyer defaults on a real estate contract that includes a forfeiture clause. The seller may retain the earnest money as:
AA penalty that must also be reported to the LREC
BLiquidated damages — a pre-agreed remedy for the buyer's breach, in lieu of pursuing actual damages✓ Correct
COnly a partial remedy — the seller must still sue for all additional losses
DA prohibited penalty under Louisiana contract law
Explanation
A forfeiture clause (liquidated damages clause) in a Louisiana purchase agreement allows the seller to retain the earnest money as the agreed remedy if the buyer defaults. This forfeiture is treated as liquidated damages, and the seller typically waives the right to sue for additional damages by accepting this remedy.
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