Broker Lee receives a personal check for earnest money that bounces when deposited. The seller demands that Lee make good on the check from her own funds until the buyer provides a replacement. How should Lee respond?
Correct Answer
B) Notify all parties that no valid earnest money was received
When an earnest money check bounces, no valid deposit was actually received. The broker must notify all parties of this fact and cannot use personal funds to cover client obligations. Option A creates improper commingling. Option C doesn't address the notification requirement. Option D exceeds the broker's authority as only parties can cancel contracts.
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