18. A couple enters into a purchase contract to buy a house, and their parents are providing a $6,000 earnest money check. The check is deposited in the listing broker's escrow account. The buyers are unable to get financing, and the contract provides for return of the earnest money to the buyers. The buyers and seller agree in writing to the release of the earnest money. The listing broker should
Answer: B
The listing broker should issue a $5,000 check to the buyers.
Since the buyers are unable to secure financing and the contract stipulates the return of the earnest money, the listing broker is required to issue a check for the full amount of the earnest money to the buyers, as they are the ones entitled to the return.
A) issue a $5,000 check to the parents
This option is incorrect because the earnest money was provided by the parents, but the agreement for its return is between the buyers and the seller. The buyers are the parties entitled to receive the earnest money back, thus the broker cannot issue the check to the parents.
B) issue a $5,000 check to the buyers.
This option is correct as it aligns with the terms of the contract which allows for the return of the earnest money to the buyers, given that they were unable to secure financing. The written agreement between the buyers and seller for the release of the earnest money further supports this action.
C) return the earnest money check, minus expenses, to the parents.
This option is incorrect because it does not account for the contractual agreement that specifies the return of earnest money to the buyers. Additionally, returning the earnest money minus expenses would typically not be permissible unless the contract allows for such deductions, which is not indicated in this scenario.
D) return the earnest money check, minus expenses, to the buyers.
This option is not correct because while it acknowledges the buyers as the recipients, the phrase "minus expenses" implies that deductions would be made. Since the contract specifies a full return of the earnest money, the broker should not deduct any expenses.
Conclusion
The correct course of action is for the listing broker to issue a $5,000 check to the buyers, as they are entitled to the full return of the earnest money. The other options misinterpret the contractual obligations and the conditions under which the earnest money should be returned, ultimately leading to incorrect conclusions about the distribution of funds.