A buyer under a Florida residential purchase contract fails to secure financing by the loan approval deadline and does not notify the seller. The seller wants to keep the earnest money deposit. What is the most likely outcome under Florida law?
Correct Answer
D) The seller can claim the deposit as liquidated damages if properly specified in the contract
Under Florida law, if the contract properly specifies earnest money as liquidated damages for buyer default, the seller can claim it when the buyer breaches. Option A is incorrect because forfeiture isn't automatic without proper contract language. Option B is wrong because the buyer's failure to meet contingency deadlines constitutes breach. Option C is incorrect as mediation isn't required before deposit distribution for clear breaches.
Why This Is the Correct Answer
Why the Other Options Are Wrong
Deep Analysis of This Real Estate Contracts Question
Background Knowledge for Real Estate Contracts
Real World Application in Real Estate Contracts
Common Mistakes to Avoid on Real Estate Contracts Questions
Related Topics & Key Terms
Key Terms:
Related Concepts
The Statute of Frauds is a legal requirement that certain types of contracts must be in writing and signed to be enforceable. In real estate, all contracts for the sale of land or interests in land must be in writing.
A time is of the essence clause in a contract means that all deadlines and dates specified in the agreement are strictly enforceable, and failure to meet them constitutes a material breach.
An appraisal contingency allows the buyer to cancel or renegotiate the contract if the property's appraised value comes in lower than the agreed-upon purchase price. This contingency protects buyers from overpaying.
More Real Estate Contracts Questions
All of the following are required elements of a valid Florida real estate purchase contract EXCEPT:
A seller accepts a buyer's offer on their Florida home but dies before closing. The seller's estate representative wants to cancel the contract. What is the legal status?
The FAR/BAR residential contract requires earnest money held by:
A buyer signs a Florida purchase contract for a condo and learns during the inspection period about a special assessment of $10,000. The seller knew but didn't disclose this. What are the buyer's rights?
A buyer and seller in Florida agree to extend the closing date by 10 days. The original contract had a 'time is of the essence' clause. What must they do to make this extension valid?
- → A Florida real estate licensee prepares a purchase agreement that includes a financing contingency. The buyer fails to apply for financing within the specified timeframe. What is the legal consequence under Florida contract law?
- → Under Florida law, all of the following would typically survive the closing of a real estate purchase agreement EXCEPT:
- → Broker Sarah receives a $5,000 earnest money deposit from buyer Johnson for a property purchase. The contract states the deposit should be held in escrow. According to Florida law, what must Sarah do with this deposit?
- → A buyer in Fort Lauderdale breaches a residential purchase contract by refusing to close without legal justification. The contract contains a liquidated damages clause equal to the earnest money deposit of $5,000. What is the seller's most likely remedy?
- → A seller in Florida fails to deliver clear title by the closing date due to an unexpected lien. The buyer wants to proceed but needs more time. What is the most appropriate course of action?
- → Under Florida law, a real estate purchase contract may be rescinded for all of the following reasons EXCEPT:
- → Under Florida real estate law, all of the following are acceptable remedies for contract breach EXCEPT:
- → In Gainesville, a buyer discovers that the seller's agent failed to disclose a material fact about flooding history. The buyer wants to cancel the contract before closing. Under Florida law, what is the buyer's strongest legal basis?
- → A 17-year-old inherits a property in Florida and wants to sell it. The minor enters into a sales contract with a buyer. Under Florida law, what is the status of this contract?
- → Audit memo Harbor Case highlights this Florida rule. In a Tallahassee transaction, a closing coordinator wants the Florida rule on offer. Which statement is correct?
People Also Study
Buyer Representation Agreement
8% of exam
Property Ownership
10% of exam
Land Use Controls and Regulations
8% of exam
Valuation and Market Analysis
10% of exam
Related Articles
How to Study Real Estate Valuation Questions Without Letting Principle Names Replace Actual Reasoning
A topic that feels clear in notes can still fail in practice if recall has not caught up with recognition. If you are searching for study real estate...
How to Review Real Estate Math Questions Without Letting Formula Memory Crowd Out Reading Accuracy
A topic that feels clear in notes can still fail in practice if recall has not caught up with recognition. If you are searching for review real estate math...
Essential Real Estate Math Formulas You Need to Know
Master the key math formulas for your real estate exam. Covers commission, prorations, area calculations, and more with step-by-step examples.