medium · National Real Estate Exam property-management

For a liquidated damages clause to be enforceable in a court of law, the amount specified must be:

1. Placed by the buyer into a federally insured, non-interest-bearing trust account.
2. A reasonable estimate of the probable loss at the time of contracting.
3. No less than ten percent of the total agreed purchase price.
4. Freely refundable to the buyer whenever the transaction later falls through.

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