What are the legal remedies when a buyer defaults on a sales contract?

When a buyer defaults on a sales contract, the seller has specific legal remedies available to them. One of the key remedies is the right to sue for damages incurred due to the default. This could include any financial losses the seller experienced as a direct result of the buyer not fulfilling their contractual obligations.

In addition to seeking damages, the seller is typically entitled to retain the earnest deposit provided by the buyer. The earnest deposit serves as a form of security for the seller during the transaction; it indicates the buyer's commitment to the purchase. If a buyer defaults, the seller can keep this deposit, which helps to mitigate some of the losses resulting from the breach of contract. This dual approach allows the seller both to seek compensation for losses and to benefit from the earnest money intended to solidify the contract's terms.

Other options do not align with common real estate practices. For instance, the seller is not obligated to return the earnest deposit, as it is intended to protect them in case of default. Although cancellation of the sales contract can be pursued, it is often accompanied by seeking damages and retaining the deposit, providing a more robust means of addressing the default situation.