Which term describes a deposit associated with seeking specific performance?

• A. Earnest money
• B. Liquidated damages
• C. Down payment
• D. Specific performance deposit

Answer: (D)

The main idea is that in real estate contracts, deposits show intent to perform and provide security for the deal. When the remedy being pursued is specific performance—forcing the seller to complete the sale—the deposit used for that purpose is called a specific performance deposit. This designation signals that the funds are tied to ensuring that the contract is actually carried out, and they can be held in escrow or applied toward performance depending on the outcome. Earnest money is a general term for a buyer’s initial show of good faith, not specifically tied to the court-ordered performance remedy. A down payment is money toward the purchase price, not a security deposit. Liquidated damages are a pre-set remedy for breach, not a deposit used to secure performance. So the term that best describes a deposit associated with seeking specific performance is a specific performance deposit.