Under the TREC contract, what is the primary purpose of earnest money in a Texas real estate transaction?
Correct Answer
D) To demonstrate the buyer's good faith intention to complete the purchase
Earnest money serves as a good faith deposit that demonstrates the buyer's serious intention to complete the purchase. It shows the seller that the buyer is committed to the transaction.
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Related Topics & Key Terms
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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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In Texas, title insurance rates are:
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Under the TREC contract, a TREC Amendment is effective when:
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