Jennifer submits a written offer on a single-family home and tenders a $10,000 check that her listing brokerage deposits into its escrow account within three business days, as state law requires. The funds remain in the account until closing, at which point they are credited toward Jennifer's down payment. Had Jennifer defaulted without exercising a valid contingency, the contract specifies the seller could have claimed the $10,000 as a remedy. Had the seller wrongfully refused to close, Jennifer would have been entitled to a full refund. The $10,000 functioned in this transaction as which of the following?
Correct Answer
C) Earnest money deposit
The $10,000 was tendered at the moment Jennifer made her offer, sat in escrow until closing, and was credited toward her purchase. Its dual nature — evidence of buyer commitment and a contractual remedy fund — matches the role of an earnest money deposit.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A breach of contract occurs when one party fails to perform their obligations under the contract without a legal excuse. The non-breaching party is entitled to legal remedies including damages, specific performance, or contract rescission.
Consideration is something of value exchanged between parties to a contract, making the agreement legally binding. It can be money, a promise to act, a promise to refrain from acting, or anything else of value.
Contingencies are conditions written into a real estate contract that must be met before the transaction can close. If a contingency is not satisfied, the buyer can typically cancel the contract without penalty.
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