Which remedy allows the seller to keep the earnest money if the buyer is in default?

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Multiple Choice

Which remedy allows the seller to keep the earnest money if the buyer is in default?

Explanation:
Earnest money is a security deposit held in escrow to show the buyer’s commit­ment to the contract. If the buyer defaults, a liquidated damages clause lets the seller keep that deposit as pre‑agreed compensation for the breach, without having to prove actual losses. This gives both sides certainty and avoids lengthy litigation—the seller gets paid the agreed amount, and the buyer agrees to accept that consequence for breaching. Other remedies would require proving damages, forcing performance, or resolving the dispute through arbitration, rather than automatically forfeiting the deposit.

Earnest money is a security deposit held in escrow to show the buyer’s commit­ment to the contract. If the buyer defaults, a liquidated damages clause lets the seller keep that deposit as pre‑agreed compensation for the breach, without having to prove actual losses. This gives both sides certainty and avoids lengthy litigation—the seller gets paid the agreed amount, and the buyer agrees to accept that consequence for breaching. Other remedies would require proving damages, forcing performance, or resolving the dispute through arbitration, rather than automatically forfeiting the deposit.

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