With regards to the last line of this section:
"LIQUIDATED DAMAGES/NON-REFUNDABLE DEPOSIT: Upon the removal of Buyer's contingencies, the Deposit shall become non-refundable in the
event of a default by Buyer . . . . Seller's sole and maximum obligation and liability under this contract shall be limited to the refund of
any refundable earnest money deposit made by Buyer."
Does this mean that Seller can back out of the deal at anytime for any reason, and the maximum penalty is to refund the earnest money?
The quoted portions of this section of your contract don't make sense when read together because they seem to relate to two different things. However, if the sentence after the ellipsis stands alone, then it would appear the buyer's only recourse in the event of a breach by the seller would be to obtain a refund of the earnest money from the seller.
This is a general opinion based on limited facts presented and does not constitute legal advice or establish an attorney-client relationship with the questioner or any other persons.
These 2 provisions appear to relate in part to a contract with a contingency. The entire contract must be reviewed. Go back to the lawyer who initially helped you with this transaction, or if you had none, go to a real estate lawyer. Isolated language cannot be interpreted without reviewing the entire agreement.
Yes. Many commercial real estate contracts have mutual remedy language similar to the above...if the Buyer defaults, they lose their Earnest Money, if the Seller defaults, the Buyer gets their earnest money back. During the due diligence contingency (or other contingency), the Buyer usually has the option to cancel the contract (and receive a return of the Earnest Money) at their sole and absolute discretion; however, after contingencies are expired, the Earnest Money is "hard" absent a default by Seller. When representing a Buyer, I usually attempt to change the above provisions to reflect that in the event of a Seller default, Buyer has the OPTION to either: (i) maintain an action for specific performance; or (ii) declare the contract null and void and receive a refund of the earnest money as well as some amount for out-of pocket expenses and damages incurred due to the default (usually with a capped amount depending on the size of the transaction)...which is obviously much more desirable for a Buyer than just the return of the Earnest money alone. Definitely discuss more with your attorney or feel free to contact me with any questions.
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