As a contractual safety, a forfeiture clause in sale agreement penalises a defaulting party, usually the buyer, for not fulfilling agreed-upon obligations. The seller may forfeit all or a portion of the buyer's deposit, for instance, if payments are not made on time or the transaction is not completed. In addition to compensating for any losses sustained, this guarantees accountability.
How it Works:
Breach of Contract: Caused by the buyer's nonpayment or contract violations.
Property or Financial Loss: The buyer loses deposits, including earnest money.
Compensation for Seller: Forfeited funds cover losses or inconvenience caused by the buyer’s default.
The forfeiture clause in sale agreement sample example in real estate is a condition which allows the seller to keep the earnest money deposit if the buyer fails to pay the remaining amount by the due date.
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A forfeiture clause in sale agreement outlines the conditions under which a party, usually the buyer, forfeits their rights to certain benefits (such as a deposit) if they fail to fulfill their contractual obligations. I have shared the key points typically included in a forfeiture clause.
Key Points of a Forfeiture or a Sale Agreement Cancellation Clause
A forfeiture clause in sale agreement specifies the events that will trigger the forfeiture, such as failure to make a payment, breach of contract terms, or failure to complete the transaction within a specified period.
The key pointers that are mentioned in this agreement are as follows,
Forfeited Amount: Details about the amount or type of asset to be forfeited, which is often the initial deposit or earnest money paid by the buyer.
Legal Recourse: States the rights and remedies available to the non-breaching party, typically the seller, if the forfeiture clause is invoked.
Notice Period: Requires the seller to provide notice to the buyer before invoking the forfeiture clause, allowing the buyer a chance to remedy the breach if applicable.
Waiver of Claims: States that the buyer waives any claims to the forfeited amount and accepts the seller's right to retain it as compensation for the breach.
This is all about the cancellation clause in sale agreement.
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What is a Forfeiture Clause in Sale Agreement?
Karishma
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11 months
2024-12-30T10:10:06+00:00 2024-12-30T10:10:06+00:00Comment
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