Contracts
A West Virginia real estate contract contains a liquidated damages clause stating the seller may keep the earnest money if the buyer defaults. This clause is enforceable if:
AThe earnest money amount is always fixed at 10% of purchase price by law
BThe amount is a reasonable pre-estimate of damages, not a penalty✓ Correct
CBoth parties are represented by attorneys
DThe clause is recorded with the county clerk
Explanation
Liquidated damages clauses in West Virginia are enforceable when the amount represents a reasonable pre-estimate of anticipated damages and actual damages would be difficult to calculate. Excessive amounts intended as penalties may be struck down.
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