A buyer submits an earnest money deposit of $5,000 with their offer on a Florida property. The contract is rejected by the seller. Under Florida law, what should happen to the earnest money?
Correct Answer
B) The earnest money is returned to the buyer immediately
Correct: When a contract is rejected, the earnest money must be returned to the buyer immediately as no valid contract exists. Why not A: The seller has no claim to earnest money when rejecting an offer. Why not C: There is no requirement to hold funds when no contract exists. Why not D: Splitting funds is not permitted without a valid contract provision.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Earnest money is a deposit made by the buyer at the time of the offer or shortly after to demonstrate good faith and serious intent to purchase the property. It is also called a good faith deposit.
Equitable title is the buyer's interest in a property after a purchase contract is signed but before closing, giving the buyer the right to acquire legal title in the future. The seller retains legal title until the deed is delivered at closing.
A financing contingency makes the purchase contract conditional upon the buyer obtaining mortgage approval within a specified time period. If the buyer cannot secure financing, they can cancel the contract and receive their earnest money back.
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- → Broker Sarah receives a $5,000 earnest money deposit from buyer Johnson for a property purchase. The contract states the deposit should be held in escrow. According to Florida law, what must Sarah do with this deposit?
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Previous Question
Audit memo Cedar Memo highlights this Florida rule. In a Tallahassee transaction, a closing coordinator wants the Florida rule on deposit receipt. Which statement is correct?
Next Question
A Florida real estate broker receives a $10,000 earnest money deposit. The buyer defaults on the contract after the inspection period expires. The seller demands the earnest money, but the buyer claims they should receive it back due to financing issues. What should the broker do?