Question 71

The broker should refuse to release the earnest money.

Releasing the earnest money prior to the buyer's property inspection would violate the terms outlined in the purchase and sales agreement, which stipulates that the seller receives the earnest money only after the inspection is completed.

A) release the earnest money to the seller immediately.

This option is incorrect because it disregards the terms of the purchase and sales agreement, which clearly states that the earnest money should not be released until after the buyer's property inspection. Immediate release would not be compliant with the agreement.

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

While notifying the buyer might seem prudent, this option is still incorrect. The broker cannot notify the buyer of an intention to release the earnest money because doing so would contradict the contractual obligation to withhold it until after the inspection.

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

This option is also incorrect as it undermines the terms of the purchase and sales agreement. A verbal approval does not satisfy the requirement for the earnest money to be released only after the completion of the property inspection.

D) refuse to release the earnest money.

This is the correct option, as it adheres to the stipulations in the purchase and sales agreement. The broker must refuse to release the earnest money until the buyer's property inspection is completed, ensuring compliance with the contract.

Conclusion

The correct answer, refusing to release the earnest money, is critical in maintaining adherence to the terms of the purchase and sales agreement. All other options either violate contractual obligations or fail to protect the buyer's interests, reinforcing the need for the broker to act in accordance with the established agreement.