Question 33

The broker should refuse to release the earnest money.

Releasing the earnest money to the seller before the property inspection contradicts the terms of the purchase and sales agreement, which stipulates that the money should only be released after the inspection is completed.

A) release the earnest money to the seller immediately.

This option is incorrect because it disregards the stipulation in the purchase and sales agreement that the earnest money should only be released after the buyer's property inspection. Immediate release would violate the contractual obligation.

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

While notifying the buyer is important, this option is incorrect because the broker should not intend to release the earnest money at this stage. The terms of the agreement require that the buyer's inspection must occur first.

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

This option is incorrect as well, since the agreement requires a formal process tied to the property inspection rather than a verbal approval from the buyer. This would further violate the conditions set forth in the agreement.

D) refuse to release the earnest money.

This is the correct choice as it adheres to the terms of the purchase and sales agreement. The broker must ensure that the earnest money is only released after the buyer has completed the property inspection, thereby protecting the buyer's interests.

Conclusion

The correct action for the broker is to refuse to release the earnest money, as doing otherwise would violate the contractual terms of the purchase and sales agreement. Options A, B, and C fail to align with these terms, thereby emphasizing the necessity of adhering to the proper procedure established in the agreement.