ContractsQuestion 67 of 120
In most residential purchase contracts, the earnest money deposit is:
a.Kept by the broker as a nonrefundable fee in all cases
b.Paid directly to the county as a tax
c.Applied toward the purchase price or closing costs at closing
d.Returned to the buyer even after a buyer default
Explanation
Earnest money is credited toward the buyer's purchase price or closing costs when the transaction closes. If the buyer defaults without a valid contingency, the seller may be entitled to keep it as liquidated damages. Its handling depends on the contract terms and whether contingencies are met.
Practice all 120 questions free — no signup required.
Related questions on this topic
- The transfer of one's rights and obligations under a contract to another person is called:
- A contract signed by a minor is generally considered:
- 'Time is of the essence' in a real estate contract means:
- An option contract gives the holder (optionee) the:
- Which of the following typically makes a contract 'void' rather than merely voidable?
- A 'meeting of the minds,' essential to contract formation, refers to:
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against Florida Real Estate Sales Associate Licensing Exam · How we review