An Ohio purchase agreement for $420,000 includes a liquidated damages clause allowing the seller to retain the $12,000 earnest money upon buyer default. The buyer defaults. The seller relists the property and sells it 3 months later for $415,000, incurring $2,100 in additional carrying costs. Under Ohio law, if the seller elects actual damages instead of liquidated damages, what would the seller's recovery be?
Correct Answer
B) $7,100 — the price difference plus carrying costs
If the seller elects actual damages instead of liquidated damages, the calculation is: price difference ($420,000 - $415,000 = $5,000) plus additional carrying costs ($2,100) = $7,100. The seller must choose between liquidated damages ($12,000) and actual damages ($7,100). In this case, the liquidated damages clause would provide a larger recovery.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A counteroffer is a response to an original offer that changes one or more terms of the offer, effectively rejecting the original offer and creating a new offer. The party who makes the counteroffer becomes the new offeror.
Earnest money is a deposit made by the buyer at the time of the offer or shortly after to demonstrate good faith and serious intent to purchase the property. It is also called a good faith deposit.
Equitable title is the buyer's interest in a property after a purchase contract is signed but before closing, giving the buyer the right to acquire legal title in the future. The seller retains legal title until the deed is delivered at closing.
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