Washington State Real Estate Practice Exam

If a buyer defaults on a real estate contract in Washington, the seller has the option to keep the earnest money as liquidated damages. This is a common practice in real estate transactions where the earnest money, which is a deposit made by the buyer to show their serious intent to purchase the property, acts as a protective measure for the seller.

When a buyer fails to fulfill the terms of the contract, the seller is often entitled to retain this deposit because it compensates them for the potential losses incurred due to the default, such as the opportunity cost of missing out on other potential buyers. This provision is typically outlined in the purchase agreement, making the earnest money a form of pre-agreed damages, or liquidated damages, that the seller can claim without needing to prove the actual monetary loss suffered.

Other options present scenarios that are less common or not directly related to standard practices regarding defaults. Not every buyer who defaults ends up in bankruptcy proceedings, nor is it standard practice to draw up a new contract if the buyer defaults. Additionally, while sellers may incur legal fees in some cases related to a default, this is not the primary outcome and does not encapsulate the immediate remedy available to the seller. Thus, retaining earnest money clearly stands out as the