A purchase and sale agreement in Washington falls through because the buyer's financing contingency was not satisfied. The seller claims the buyer did not make a good-faith effort to obtain financing and demands the $5,000 earnest money. The buyer disagrees and demands a refund. The listing broker is holding the earnest money in the firm's trust account. What should the broker do?
Correct Answer
A) Keep the earnest money in the trust account until both parties agree in writing or a court orders its release
Under RCW 18.85 and WAC 308-124D, when there is a dispute between buyer and seller over earnest money, the broker must retain the funds in the trust account until the dispute is resolved by written mutual agreement of the parties, a court order, or another legally recognized method. The broker cannot make a unilateral determination about which party is entitled to the funds.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An appraisal contingency allows the buyer to cancel or renegotiate the contract if the property's appraised value comes in lower than the agreed-upon purchase price. This contingency protects buyers from overpaying.
An assignment of contract transfers one party's rights and obligations under a contract to a third party called the assignee. The original party, known as the assignor, transfers their contractual position to someone who was not originally part of the agreement.
A bilateral contract is an agreement in which both parties exchange promises and are both obligated to perform, while a unilateral contract is one in which only one party makes a promise and the other party is not obligated to act.
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