FIRM WINS LIQUIDATED DAMAGES CASE
By Kent Berk on November 27th, 2007 in BLOG, LIQUIDATED DAMAGES, REAL ESTATE LAW
In this case, Berk Law Group, P.C. represented the sellers of three “four-plex” apartment buildings. The buyers, a married couple from California, signed three separate contracts to buy the properties. When the buyers could not close escrow by the initial close of escrow deadline, the parties agreed to extend the deadline and the buyers agreed to deposit additional earnest money to be paid to the sellers as liquidated damages if the buyers did not close escrow by the new deadline. The buyers deposited the additional earnest money on only one of the three properties, and did not pay the balance of the purchase price to close escrow by the new deadline on any of the three properties. As a result, the sellers cancelled all three contracts and demanded that the buyers pay the full amount of the agreed-upon earnest money as liquidated damages.
The trial court awarded the full earnest money as liquidated damages on only the one contract that the buyers made the deposit, but refused to award the full amount on the other two contracts. The Arizona Court of Appeals reversed and found that the sellers were entitled to the full agreed upon earnest money as liquidated damages on all three contracts.