Contracts
In Oregon, what is a 'liquidated damages' clause in a real estate purchase contract?
AA provision allowing the buyer to back out for any reason
BA pre-agreed amount (often the earnest money) that serves as the remedy if one party defaults✓ Correct
CA clause requiring the seller to pay all closing costs
DA provision requiring arbitration for all disputes
Explanation
A liquidated damages clause establishes in advance the amount of damages (typically the earnest money deposit) that the non-defaulting party will receive if the other party breaches the contract. In Oregon, if the clause is reasonable and not a penalty, courts may enforce it.
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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.
Closing CostsFees and expenses paid by the buyer and/or seller at the closing of a real estate transaction, in addition to the property's purchase price.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
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