But as time wears on, deposits are laid down, and contingencies are waived, it starts to get real. If it was a relationship, you'd pack up your toys and go home, maybe cry a little and indulge in a good book or box of chocolates. Bonny Rich-Carper, Real Estate Agent Century 21 Jim White &. The consequence of this analysis is that PTT is entitled to recover liquidated damages of $154,662 in respect of Triple Point's delay of 149 days in completing stages 1 and 2 of Phase 1. Damages often claimed as a result of breach of real estate contracts include compensatory damages, consequential damages, incidental damages, punitive damages and liquidated damages. For buyers, liquidated damage clauses limit their loss if they default. The “reasonably estimated” damages are called: “liquidated damages.” Almost all post-breach disputes over the enforceability of liquidated damages involve a large discrepancy between what the actual damages turn out to be versus what the “estimate” was in the contract. Rptr. If the buyer puts more money into escrow during the process, both the buyer and seller need to initial a second clause. Thus, to be enforceable in a real estate sales contract, the liquidated damages clause must be a good-faith attempt by both parties to reasonably approximate a fair amount for compensation to the nonbreaching party. The “reasonably estimated” damages are called: “liquidated damages.” Almost all post-breach disputes over the enforceability of liquidated damages involve a large discrepancy between what the actual damages turn out to be versus what the “estimate” was in the contract. In the RPA-CA, the section titled Remedies for Buyer’s Breach of Contract states: “If Buyer fails to complete this purchase because of Buyer’s default, Seller shall retain, as liquidated damages, the deposit actually paid. These should be in the contractual agreement when monetary awards are necessary for damages due to a lawsuit. Liquidated damages clauses are commonly used in real estate contracts. Her first question is “Did you sign or initial a second Liquidated Damages clause separate from the Liquidated Damages Clause in your original Purchase Contract for the second $35,000 Deposit?”  You don’t remember, but you did sign all the paperwork provided to you by your broker. A liquidated damages provision in a listing agreement sets forth the amount of money both parties agree will be paid to the broker in the event that certain events occur, including, first and foremost, the seller's breach of the agreement. Clever’s Concierge Team can help you compare local agents and find the best expert for your search. Initialing the Liquidated Damages clause makes sense for both parties and is customary. Your broker repeatedly says you are entitled to the full $45,000 in Liquidated Damages without proving actual damages. [12] When a contract contains a liquidated-damages provision, the amount of damages in the event of a breach is either specified, or a precise method for determining the sum of damages is laid out. Liquidated Damages When a real estate deal goes bad, one party may be entitled to payment in the form of liquidated damages. A Liquidated Damages provision allows for the payment of specified damages should the buyer breach the contract – a way to stipulate damages on the front-end of the transaction to save the parties from spending time and money fighting over damages at the back-end of the transaction. Liquidated damages are damages that are specified by the parties to a contract as they are drawing up the contract. That means that a real estate lawyer should be contacted to discuss possible complications that may arise and the best way to mitigate the economic injury. In our contract, we have a liquidated damages clause for $10,000. If you have questions about the foregoing, please feel free to contact Jennifer Johnson, Kendall Patton or other members of Carr McClellan’s Real Estate Group. Legal Tools. The amount of liquidated damages is the number of liquidated funds you are entitled to, due to those damages. Enforcing the Liquidated Damages Clause in the RPA By: D. Keith B. Dunnagan, Esq. 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