When a buyer defaults on a purchase contract, the seller has three legal options: keep the buyers earnest money deposit, litigate for damages, and sue the buyer for specific performance. Let’s go over the option of keeping the buyer’s earnest money deposit.
When a buyer defaults on a purchase contract, a sellers best option is to keep the buyer’s earnest money deposit. If the contract specifies the seller can keep the deposit as liquidated damages, then the seller can keep it, even if he or she sells the property to another homebuyer for full price. In many cases, a buyer will walk away and forfeit their deposit, especially if it’s not a large amount. If the buyer objects and the money is tied up in escrow, the seller or buyer will have to seek legal options to resolve the situation.
It’s important to know that even if a buyer breaches a contract, he or she may be able to present an arguable case to get their money back. Usually this is rare, such as when the earnest money deposit is very large and a buyer’s breach was minor.
If you’ve been burned trying to purchase a property in Orange County, try using these experienced Tustin Realtors to help you look for your next home.
