Key Takeaways
- Specific performance forces completion of the contract and is the preferred remedy because each property is unique.
- Compensatory damages cover actual financial losses; liquidated damages are predetermined amounts specified in the contract.
- Earnest money typically serves as liquidated damages in residential purchase agreements.
- Rescission cancels the contract and requires restitution; reformation corrects mutual mistakes.
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Test Your Knowledge
1.When is specific performance most commonly sought in real estate?
2.What are liquidated damages in a real estate contract?
3.What is the remedy of rescission?