Phil, an Ohio buyer, writes a personal check for $4,000 as earnest money. The check is deposited by the listing broker but is returned by the bank due to insufficient funds. Under Ohio practice, what is the immediate effect on the purchase agreement?
Correct Answer
A) The contract remains in effect, but the seller may choose to terminate due to the buyer's failure to provide valid earnest money
A bounced earnest money check does not automatically void the purchase agreement. However, it represents a material breach by the buyer. The seller has the option to declare the buyer in default and terminate the contract, or to give the buyer an opportunity to provide replacement funds.
Why This Is the Correct Answer
Why the Other Options Are Wrong
Deep Analysis of This Oh Specific Contracts Forms Question
Background Knowledge for Oh Specific Contracts Forms
Real World Application in Oh Specific Contracts Forms
Common Mistakes to Avoid on Oh Specific Contracts Forms Questions
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.
More Oh Specific Contracts Forms Questions
An Ohio purchase agreement for a rural property includes a well water contingency. The water test results show nitrate levels of 8 mg/L, which is below the EPA maximum contaminant level of 10 mg/L. However, the buyer is concerned because the level is elevated compared to the local average of 2 mg/L. Under Ohio practice, can the buyer terminate?
An Ohio purchase agreement includes a financing contingency with the following language: 'Buyer shall use best efforts to obtain financing.' The buyer applies to one lender, is denied, and immediately invokes the financing contingency to terminate. The seller argues the buyer did not use 'best efforts.' Under Ohio case law, what standard applies?
An Ohio purchase agreement typically contains several essential elements. Which of the following is NOT a required element of a valid Ohio real estate purchase agreement?
An Ohio buyer submits an offer with $8,000 earnest money. The listing broker deposits the check, but the purchase agreement actually specified that the earnest money would be held by a title company. The listing broker deposited it into the brokerage trust account by mistake. Under Ohio practice, what should happen?
Brian, a seller in Ohio, enters into a purchase agreement that includes a clause stating: 'If the buyer defaults, the seller may retain the earnest money as liquidated damages.' Brian's buyer defaults after all contingencies have been satisfied. Under Ohio law, what determines whether this liquidated damages clause is enforceable?
- → Diana, an Ohio listing agent, fails to present a buyer's offer to the seller because Diana was personally negotiating to purchase the property for herself. The buyer discovers the undisclosed offer and files a complaint. Under Ohio law, what consequences may Diana face?
- → Sandra, a buyer in Ohio, wants to assign her purchase agreement to her family's LLC before closing. Under Ohio law, which statement about contract assignment is correct?
- → An Ohio purchase agreement for a lakefront property in Ottawa County includes a contingency for a satisfactory dock permit review. The buyer's agent discovers that the dock does not have a valid Ohio Department of Natural Resources (ODNR) permit. Under the contingency, what is the buyer's recourse?
- → Jack, an Ohio buyer, has a purchase agreement with an inspection contingency. The home inspector discovers that the home has knob-and-tube wiring in the attic, which is still functioning. Jack's insurance company informs him that they will not insure the property unless the wiring is replaced. Under Ohio practice, what is Jack's best option?
- → Peter, an Ohio buyer, asks his agent about the difference between actual damages and liquidated damages. Under Ohio law, which statement correctly distinguishes the two?
- → Frank, an Ohio buyer, discovers that the seller's listing agent provided false information about the property's zoning. Frank suffered financial losses as a result. Under Ohio law, can Frank file a claim with the Ohio Real Estate Recovery Fund?
- → Grace, a buyer in Ohio, wants to know the difference between rescission and breach of contract. Under Ohio law, what is rescission?
- → Megan, a first-time Ohio buyer, asks her agent what 'specific performance' means as a remedy for breach of contract. Under Ohio law, which description is correct?
- → Tom, an Ohio buyer, refuses to close on a property after all contingencies have been satisfied and all deadlines have passed. Under Ohio contract law, what type of action has Tom committed?
- → Martha, an Ohio seller, provides a warranty deed to the buyer at closing. After closing, the buyer discovers an existing lien that was not disclosed. Under Ohio deed warranty law, what remedy does the buyer have?