A buyer and seller in Texas execute a contract with a $600 option fee and 10-day option period. The contract also specifies $15,000 in earnest money. After the option period expires, the buyer stops responding to communications and fails to close. The seller terminates for buyer default. Both the buyer and seller sign a release authorizing the title company to disburse the earnest money to the seller. What is the total amount the seller retains from the buyer's payments?
Correct Answer
A) $15,600 (option fee plus earnest money)
The seller retains both the $600 option fee (already held as non-refundable consideration) and the $15,000 earnest money (released to the seller as liquidated damages upon buyer default). Total: $600 + $15,000 = $15,600.
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Related Concepts
Contingencies are conditions written into a real estate contract that must be met before the transaction can close. If a contingency is not satisfied, the buyer can typically cancel the contract without penalty.
Contract termination occurs when a contract is ended or discharged, releasing both parties from their obligations. A contract can be terminated through performance, mutual agreement, operation of law, or breach.
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.
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