A buyer in Orlando deposited $5,000 as the initial escrow deposit, but the later additional deposit of $4,000 was never made. The buyer defaulted before paying that second deposit, and the contract permits the seller to retain deposits actually received as liquidated damages. How much may the seller retain?
Correct Answer
A) $5,000
Only the deposit actually received may be retained under the stated facts, so the amount is $5,000.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
Novation is the substitution of a new contract for an existing one, or the replacement of one party with a new party, with the consent of all parties involved. The original party is completely released from all obligations.
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