A Mesa buyer breaches a purchase contract, and the seller resells the property for $10,000 less than the original contract price, plus incurs $3,000 in additional marketing costs. The earnest money was $5,000. Under Arizona law, what is the seller's likely damage recovery?
Correct Answer
D) Either earnest money or actual damages, whichever is greater
Under Arizona law, sellers typically can choose between retaining earnest money as liquidated damages or pursuing actual damages, but not both, selecting whichever provides greater compensation. Option A is incorrect because it ignores the seller's right to pursue actual damages if greater. Option B is wrong because if earnest money serves as liquidated damages, actual damages may not be available. Option C is incorrect because it attempts to combine remedies that are typically mutually exclusive.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A financing contingency makes the purchase contract conditional upon the buyer obtaining mortgage approval within a specified time period. If the buyer cannot secure financing, they can cancel the contract and receive their earnest money back.
An inspection contingency gives the buyer the right to have the property professionally inspected within a specified time frame and to negotiate repairs or cancel the contract based on the findings.
Liquidated damages are a predetermined amount of money specified in the contract that the non-breaching party is entitled to receive if the other party breaches. In real estate, the earnest money deposit typically serves as liquidated damages.
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