[WSBARP] Option Payment vs. Non-refundable Deposit

[Paul Neumiller]

In CA, the courts hated the concept of a "forfeiture" with a non-refundable
deposit, even for commercial transactions.  The courts felt that a large
forfeited "nonrefundable" deposit was punitive in nature and imposed all
kinds of "reasonableness" tests.  Sooooo, representing sellers, many times I
drafted purchase and sale documents as an option thereby re-characterizing
the non-refundable deposit as an option price.  It survived judicial
scrutiny because there was no "forfeiture" of a deposit because the buyer
got what he paid for, the right to exercise the option for a set period.

 

So, do WA courts hate the non-refundable deposit as much as CA, even in
commercial situations?    I'm don't care about locking the buyer in because
there is a generous feasibility period anyway.  

 

 

 



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