A buyer and seller in Texas have a dispute over the earnest money after the contract falls through. Both parties claim they are entitled to the funds. The escrow agent holding the earnest money should:
Correct Answer
D) Hold the funds until both parties agree on disposition or a court orders the release
When there is a dispute over earnest money, the escrow agent must hold the funds until both parties agree on the disposition or a court orders the release. The escrow agent cannot unilaterally decide who receives the funds.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
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.
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