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?
Correct Answer
C) Hold the funds and request written authorization from both parties or seek FREC guidance
Correct: When there is a dispute over earnest money, the broker must hold the funds and either obtain written authorization from both parties or request an escrow disbursement order from FREC. Why not A: Cannot release without proper authorization when disputed. Why not B: Financing issues after inspection period may not justify return. Why not D: Cannot split funds without agreement or legal directive.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An inspection contingency gives the buyer the right to have the property professionally inspected within a specified time frame and to negotiate repairs or cancel the contract based on the findings.
Liquidated damages are a predetermined amount of money specified in the contract that the non-breaching party is entitled to receive if the other party breaches. In real estate, the earnest money deposit typically serves as liquidated damages.
Novation is the substitution of a new contract for an existing one, or the replacement of one party with a new party, with the consent of all parties involved. The original party is completely released from all obligations.
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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?
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A buyer in Florida puts down earnest money equal to 2% of the purchase price on a $350,000 home. How much earnest money did the buyer deposit?