18. The purchase and sales agreement provides for release of earnest money to the seller after the buyer's property inspection. The seller requests the earnest money prior to the property inspection. The broker should
Answer: D
The broker should refuse to release the earnest money.
In this scenario, the broker must adhere to the terms outlined in the purchase and sales agreement, which stipulates that the earnest money is to be released to the seller only after the buyer's property inspection. Prematurely releasing the earnest money prior to this condition being met would violate the agreement.
A) Release the earnest money to the seller immediately
This option is incorrect because it contradicts the terms of the purchase and sales agreement. The agreement explicitly states that the earnest money should only be released after the buyer's property inspection, and releasing it immediately would not comply with this requirement.
B) Notify the buyer of the broker's intention to release the earnest money to the seller
While notifying the buyer is a good practice, this option is ultimately incorrect because the broker does not have the authority to release the earnest money prior to the completion of the property inspection. The broker must adhere to the agreement and cannot proceed with the release without fulfilling the stipulated condition.
C) Release the earnest money on the buyer's verbal approval
This option is also incorrect because it bypasses the formal process established in the purchase and sales agreement. Even if the buyer verbally approves, the broker is still bound by the written terms of the agreement, which require the inspection to occur before any release of earnest money can take place.
D) Refuse to release the earnest money
This is the correct option. The broker should refuse to release the earnest money since the conditions set forth in the purchase and sales agreement have not yet been met. By doing so, the broker ensures compliance with the contractual obligations.
Conclusion
Refusing to release the earnest money is the only appropriate action in this situation, as it maintains adherence to the contractual terms of the purchase and sales agreement. All other options would result in a breach of the agreement, potentially leading to legal ramifications for the broker. Therefore, option D is the definitive correct answer.