Contracts
A Massachusetts buyer signs an Offer to Purchase with a $10,000 deposit. The seller accepts. The buyer then backs out before a P&S is signed. What happens to the deposit?
AIt is always returned to the buyer
BIt is forfeited to the seller as liquidated damages per the offer terms✓ Correct
CIt is split equally between buyer and seller
DIt is held by the broker indefinitely
Explanation
If the Offer to Purchase is a binding contract and the buyer defaults, the seller is typically entitled to retain the deposit as liquidated damages, as specified in the offer terms.
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