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What is the difference between liquidated damages and specific performance?
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When the buyer or seller defaults on his obligation to sell or buy real estate the contract to buy and sell real estate specifies what the party’s remedies are. For example a buyer has signed a contract to buy real estate and with that has deposited $100k earnest money with a local title company.
All the due diligence deadlines have passed and the contract has gone hard. The buyer has now changed his mind or circumstances has changed and he is not willing or able to follow through with the purchase, the contract specifies the consequences for the buyers default on his obligations.
If liquidated damages have been selected as the sellers only recourse against the buyer than the earnest money is the only thing the buyer will forfeit.
If on the other hand specific performance was selected the seller can “force” the buyer to actually buy the property at the agreed price. Specific performance is a more likely for the buyer who will want to make sure that he can force the seller to sell him the |
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