What happens if a buyer breaches and the deposit is forfeited under the terms of the agreement?

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Prepare for the Nova Scotia Association of Realtors Exam. Study with flashcards and multiple choice questions, each question includes hints and explanations. Get ready for your exam!

Multiple Choice

What happens if a buyer breaches and the deposit is forfeited under the terms of the agreement?

Explanation:
The main idea is that the deposit acts as security for the seller and is treated as compensation if the buyer breaches. When the contract allows for liquidated damages, the deposit is forfeited to the seller or to another party as specified in the agreement. This reflects that the buyer’s failure to perform causes the seller to incur losses, and the deposit provides a remedy for that breach. It wouldn’t be returned to the buyer, it isn’t something the licensee keeps, and it isn’t automatically used to pay closing costs because there is no closing to apply those costs to in a breach scenario.

The main idea is that the deposit acts as security for the seller and is treated as compensation if the buyer breaches. When the contract allows for liquidated damages, the deposit is forfeited to the seller or to another party as specified in the agreement. This reflects that the buyer’s failure to perform causes the seller to incur losses, and the deposit provides a remedy for that breach. It wouldn’t be returned to the buyer, it isn’t something the licensee keeps, and it isn’t automatically used to pay closing costs because there is no closing to apply those costs to in a breach scenario.

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