New Jersey Real Estate Practice Exam 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 prudent course of action. This approach protects both parties' interests while awaiting clarification on the default and any potential agreements regarding the deposit.
Option A, forfeiting the deposit to the seller, is inappropriate without explicit contractual guidance, as it may not reflect the buyer's rights. Option B, returning the deposit to the buyer, could be premature without assessing any claims the seller might have due to the buyer's default. Option D, returning the deposit to the buyer's attorney, could complicate matters if the attorney does not have clear instructions to accept the funds, leaving the broker in a precarious position.
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