Chapter 9: P&S Agreements

Question 1

Liquidated Damages

Answer 1

There is usually a liquidated damages provision in a purchase and sale agreement, allowing the seller to keep the earnest money if the buyer defaults.

Washington law does not allow the seller to keep more than 5% of the sales price as liquidated damages.

Question 2

Types of Contingency Clauses

Answer 2

Common types of contingency clauses include financing contingencies, sale of seller’s home contingencies, inspection contingencies, and second buyer contingencies.

Question 3

Bump Clause

Answer 3

A bump clause provides that the seller can keep the property on the market pending the fulfillment of a condition.

The seller can accept another offer, and terminate the first agreement if the buyer doesn’t waive the condition on demand.