76. 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.
The broker must refuse to release the earnest money because the purchase and sales agreement stipulates that such a release occurs only after the buyer's property inspection. This contractual stipulation protects the buyer's interests until the inspection is completed.
A) release the earnest money to the seller immediately.
Releasing the earnest money immediately contradicts the terms of the purchase and sales agreement, which specifies that the seller is entitled to the earnest money only after the buyer's property inspection. This would not comply with the agreed-upon conditions.
B) notify the buyer of the broker's intention to release the earnest money to the seller.
Notifying the buyer of the broker's intention to release the earnest money is unnecessary and inappropriate in this situation, as the agreement clearly states that the earnest money should not be released until after the property inspection. This action could mislead the buyer and potentially violate the broker's fiduciary duty.
C) release the earnest money on the buyer's verbal approval.
Releasing the earnest money based on the buyer's verbal approval would still be improper since the agreement requires the inspection to take place before any release. The broker must adhere to the written terms of the agreement rather than rely on informal communication.
D) refuse to release the earnest money.
Refusing to release the earnest money is the correct action for the broker to take, as it aligns with the contractual obligations outlined in the purchase and sales agreement. This protects the buyer's rights until the inspection is completed and ensures compliance with the agreement.
Conclusion
The broker's refusal to release the earnest money is justified based on the stipulations of the purchase and sales agreement, which mandates that the release occurs only after the buyer's property inspection. All other options fail to uphold the contractual obligations and could potentially jeopardize the buyer's interests. Thus, option D is definitively the correct choice.