Under Virginia contract law, when a buyer defaults on a real estate purchase contract and the contract contains a liquidated damages clause, what does that clause typically allow the seller to retain?
Correct Answer
B) The earnest money deposit as the seller's sole remedy
A liquidated damages clause in a Virginia real estate contract specifies in advance the amount of damages the non-breaching party may recover. When a buyer defaults, such a clause typically allows the seller to retain the earnest money deposit as the agreed-upon, pre-set remedy, making it the seller's sole remedy rather than pursuing additional damages in court. This is consistent with Virginia contract principles and standard residential purchase agreement practice.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
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.
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