ContractsContingenciesHARD
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.
Answer Options
A
Financing contingencyB
Inspection contingencyC
Earnest money depositD
Appraisal contingencyWhy This Is the Correct Answer
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Background Knowledge for Contracts
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Real World Application in Contracts
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Related Topics & Key Terms
Key Terms:
escrow depositgood-faith fundscredited at closingbrokerage trustremedy fund
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