Question 66

The broker should refuse to release the earnest money.

Releasing the earnest money prior to the buyer's property inspection goes against the terms of the purchase agreement, which specifies that the earnest money is to be released only after the inspection is completed.

A) release the earnest money to the seller immediately.

This option is incorrect because it disregards the conditions set forth in the purchase agreement. The agreement clearly states that the earnest money is to be released only after the buyer's property inspection, making immediate release inappropriate.

B) notify the buyer of the seller's intention to release the earnest money.

While notifying the buyer is a good practice, this option does not address the core issue of whether the broker should release the earnest money. The seller's intention does not change the conditions of the agreement, which must be adhered to.

C) release the earnest money on the buyer's verbal approval.

This choice is also incorrect as it undermines the formalities of the purchase agreement. The release of earnest money should not be based solely on verbal approval without following the stipulated process; thus, it could lead to disputes.

D) refuse to release the earnest money.

This is the correct option as it adheres to the terms of the purchase agreement, ensuring that the earnest money remains with the broker until the buyer's property inspection is completed. This protects the interests of the buyer as outlined in the agreement.

Conclusion

The only appropriate action for the broker is to refuse the release of the earnest money, as doing otherwise would violate the terms of the purchase agreement. All other options either misinterpret the agreement's stipulations or suggest actions that could lead to legal complications or disputes between the buyer and seller. Hence, adhering to the agreement's terms is essential for maintaining professional integrity and protecting the client's interests.