If the seller defaults and the buyer chooses to accept liquidated damages, what will the buyer receive?

When a seller defaults on a real estate contract and the buyer opts to accept liquidated damages, the buyer is entitled to receive the earnest money plus any additional damages that may have been agreed upon in the contract. Liquidated damages are a predefined amount specified in the contract that compensates the non-breaching party for the breach. The intention is to provide a reasonable estimate of the damages that would be incurred due to the seller's failure to fulfill their obligations under the contract.

In this context, the primary component is the earnest money deposit, which is generally held as a sign of good faith in the transaction. When a seller defaults, the buyer can reclaim this deposit, reflecting the financial impact caused by the seller's failure to perform. In addition to the earnest money, if the contract specifies additional liquidated damages designed to compensate the buyer further, these will also be granted. This ensures that the buyer is adequately compensated for any losses incurred due to the seller's actions.

The options including the return of only the earnest money or suggesting that no compensation is available do not accurately reflect the principle of liquidated damages, which is designed to provide both a base level of compensation (the earnest money) and potentially more, contingent on the terms of the contract.