Is Increased Deposit Subject To Liquidated Damages?

[mogg]

What is the name of your state? CA

BACKGROUND INFORMATION:

I am selling my home using a standard California Association of Realtors purchase agreement. On the date we were supposed to close, the buyer informed us that he was unable to get a mortgage with his current lender, and is starting to apply with a new lender. I want to proceed the sale if he can get a loan, but I have a feeling he won't be able to. He has already deposited $5000 in earnest money, and an additional $6000 as an additional deposit as part of the original contract. The additional deposit clause looks like this:

"2B. INCREASED DEPOSIT: Buyer shall deposit with Escrow Holder an increased deposit in the amount of $6000 within 3 Days After Acceptance"

The only contigency was the loan contigency. There is a loan contingency removal clause:

"2I. LOAN CONTIGENCY REMOVAL: Within 17 days after acceptance, Buy shall, as specified in paragraph 14, remove the loan contingency or cancel this agreement"

The liquidated damage clause, initialed by both buyer and seller says:

"16. LIQUIDATED DAMAGES: If Buyer fails to complete this purchase because of Buyer’s default, Seller shall retain, as liquidated damages, the deposit actually paid....
BUYER AND SELLER SHALL SIGN A SEPARATE LIQUIDATED DAMAGES PROVISION FOR ANY INCREASED DEPOSIT. (C.A.R. FORM RID)"

QUESTIONS:
1. The increased deposit in section 2B was paid to escrow. Is this increased deposit subject to the liquidated damages since it was actually paid, or do I need a separate liquidated damages provision?

2. The buyer never gave me written notice of loan contingency removal. Since it has been more than 17 days since acceptance and the contract hasn't been cancelled, is the loan contingency removal automatic? Should I ask explicitly for the loan contigency removal?

Thanks!
mogg

[nextwife]

Is the sales contract contingent upon buyer obtaining financing? If there was no breach of contract you cannot retain the earnest money as liquidated damages.

[Bigfoot]

And since you're using a California Realtor's form, your Realtor likely told you the same thing that nextwife did.