If a buyer defaults in a contract, the seller may seek what remedy against the escrow?

If a buyer defaults in a contract, the seller may seek what remedy against the escrow?

• A. Foreclosure
• B. Specific performance
• C. Liquidated damages
• D. Rescission

Answer: (C)

Liquidated damages work as a pre‑agreed amount the seller can keep if the buyer breaches, and in escrow that amount is often tied to the earnest money. This setup gives the seller quick and certain compensation for the breach without needing a longer court battle to prove actual damages. The escrow agreement typically lays out that if the buyer defaults, the seller is entitled to the specified sum from the funds held in escrow. Foreclosure, specific performance, and rescission aren’t the typical remedies against the escrow in this scenario: foreclosure relates to a loan on the property, specific performance would try to force the buyer to complete the purchase (not a pre-set loss recovery from escrow), and rescission would unwind the contract rather than provide a pre-determined damages payment.

Liquidated damages work as a pre‑agreed amount the seller can keep if the buyer breaches, and in escrow that amount is often tied to the earnest money. This setup gives the seller quick and certain compensation for the breach without needing a longer court battle to prove actual damages. The escrow agreement typically lays out that if the buyer defaults, the seller is entitled to the specified sum from the funds held in escrow. Foreclosure, specific performance, and rescission aren’t the typical remedies against the escrow in this scenario: foreclosure relates to a loan on the property, specific performance would try to force the buyer to complete the purchase (not a pre-set loss recovery from escrow), and rescission would unwind the contract rather than provide a pre-determined damages payment.