New Jersey Real Estate Practice Exam Free Practice Question
A buyer and seller have signed a contract for the sale of a commercial property which contains no instructions on what the broker, as escrow agent, is to do with escrowed monies in the event of a default by the buyer. Prior to closing, the buyer decides not to proceed with the sale. In this situation, how should the broker handle any deposit money that the broker is holding in escrow on the transaction?
Correct Answer: C
Rationale: In this scenario, maintaining the deposit in trust until the matter is resolved is the most appropriate action. This ensures that neither party is unfairly disadvantaged while the situation is clarified, particularly since the contract lacks specific instructions regarding default.
Option A, forfeiting the deposit to the seller, is premature without clear contractual terms justifying such action. Option B, returning the deposit to the buyer, could lead to disputes if the seller claims entitlement due to the buyer's default. Option D, returning the deposit to the buyer's attorney, does not address the broker's responsibility to hold the funds securely until a resolution is reached.
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