March 5th, 2011 at 10:51 pm
From time to time it is advisable to re-familiarize yourself with some of the important clauses in the RPA. For example, we discovered recently several seasoned agents had been informing clients that if the Liquidated Damages Clause is initialed by both parties, and if the buyer breached the agreement, the seller is entitled to 3% of the purchase price as damages. This is incorrect. The Liquidated Damages Clause specifically states in pertinent part: “If the buyer fails to complete the purchase because of Buyer’s default (removed all contingencies and later cancelled) Seller shall retain, as liquidated damages, the deposit actually paid…amount retained shall be no more than 4% of the purchase price.” (Emphasis added) As you may surmise, misstating this could lead to significant discrepancies and disappointed clients.
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