35. The buyer wrote an offer to purchase a property and gave the broker $10,000 earnest money. The offer required the seller to respond within six days. Three days later the buyer decided to rescind the offer and has asked for the earnest money to be returned. What will normally happen to the earnest money in such a situation?
Answer: C
The buyer has the right to rescind and have the earnest money returned.
In this scenario, the buyer can withdraw the offer within the specified timeframe of six days, and the earnest money should be returned to them as they have not yet accepted the offer.
A) The broker will retain the earnest money deposit in lieu of a commission in the event of rescission of the offer.
This option is incorrect because the broker typically does not retain the earnest money as a commission unless the transaction is completed. Since the offer was rescinded before acceptance, the earnest money should be returned to the buyer.
B) The buyer can withdraw the offer, but the seller and the broker will each receive $5,000 as liquidated damages.
This choice is inaccurate because there is no provision for liquidated damages in this context. Since the buyer rescinded the offer within the allowed timeframe, there are no damages due to the seller or broker.
C) Until the seller has accepted the offer, the buyer has the right to rescind and have the earnest money returned.
This option is correct as it clearly states that before the seller accepts the offer, the buyer retains the right to withdraw the offer and reclaim their earnest money. This reflects standard practices in real estate transactions.
D) The buyer cannot rescind the offer until the six days are up and will therefore forfeit the earnest money deposit.
This option is incorrect because it misinterprets the buyer's rights. The buyer can rescind the offer at any point before acceptance, not just after the six days lapse, thus they would not forfeit the earnest money.
Conclusion
The correct answer is C because it accurately reflects the buyer's legal right to rescind the offer and receive their earnest money back prior to the seller's acceptance. Options A, B, and D fail to appropriately address the buyer's rights in this situation, making them incorrect.