71. 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 situation, the broker must adhere to the terms outlined in the purchase and sales agreement, which stipulates that the earnest money is to be released only after the buyer's property inspection. Therefore, the broker's appropriate action is to refuse the seller's request for immediate release of the earnest money.
A) release the earnest money to the seller immediately.
Releasing the earnest money to the seller immediately contradicts the terms of the purchase and sales agreement. Since the agreement clearly states that the earnest money is to be released only after the buyer's property inspection, complying with the seller's request would violate these specified conditions.
B) notify the buyer of the broker's intention to release the earnest money to the seller.
Notifying the buyer of an intention to release the earnest money would be misleading, as there is no basis for such an action based on the agreement's terms. The broker must uphold the agreement and cannot proceed with any intention that goes against the established conditions.
C) release the earnest money on the buyer's verbal approval.
Releasing the earnest money based solely on the buyer's verbal approval is not a sufficient justification, especially since the agreement specifies a condition that must be met prior to the release. Without the completion of the property inspection, the broker cannot ethically or legally release the earnest money.
D) refuse to release the earnest money.
Refusing to release the earnest money is the correct action because it aligns with the stipulations in the purchase and sales agreement. The broker has a duty to protect the buyer's interests and follow the contractual obligations that dictate the timing of the earnest money release.
Conclusion
The broker's refusal to release the earnest money is the only correct response, as it adheres to the terms specified in the purchase and sales agreement. The other options either violate these terms or misrepresent the broker's obligations, highlighting the importance of following contractual agreements in real estate transactions.