26. A real estate broker wrote a full price offer of $350,000 for a buyer. The amount of the earnest money deposit was $25,000. The offer was accepted and the broker placed the deposit in her escrow or trust account. The next week, the buyer and the seller decided to cancel their agreement and notified the broker in writing to return the deposit. Which of the following is TRUE?
Answer: B
The broker must return the deposit, unless specifically authorized otherwise.
In this scenario, the broker is required to return the earnest money deposit to the buyer because the agreement was canceled by mutual consent. Unless there are specific terms in the contract stating otherwise, the broker does not have the authority to withhold the deposit.
A) The broker must negotiate for her commission out of the deposit.
This option is incorrect because there is no indication in the scenario that the broker is entitled to negotiate for her commission from the earnest money deposit. The broker's commission is typically agreed upon in the listing agreement, and the deposit belongs to the buyer unless otherwise specified.
B) The broker must return the deposit, unless specifically authorized otherwise.
This statement is correct as it reflects the requirement for the broker to return the earnest money deposit to the buyer upon cancellation of the agreement. Without specific authorization or contractual stipulations allowing the broker to retain part of the deposit, the broker must comply with the request to return it.
C) The broker may subtract one-half of her commission before returning the deposit.
This option is incorrect because there is no basis in this scenario for the broker to deduct any amount from the deposit for commission. The cancellation of the agreement does not provide the broker with the right to withhold funds from the deposit.
D) The broker has earned a commission and may automatically subtract the entire amount before returning the balance of the deposit to the buyer.
This option is incorrect as well, as the broker has not earned a commission in this case due to the cancellation of the agreement. The broker cannot unilaterally decide to retain any portion of the deposit without an agreement stating otherwise.
Conclusion
In summary, option B is the only correct answer as it aligns with the requirement for the broker to return the earnest money deposit to the buyer upon the cancellation of the agreement. All other options misinterpret the broker's rights concerning the deposit and fail to recognize the conditions under which the deposit must be returned.