Tennessee Real Estate Exam Practice Question
A real estate broker wrote a full-price offer of $350000 for a buyer. The earnest-money deposit was $25000. The offer was accepted and the broker placed the deposit in her escrow account. The next week the parties cancelled the contract in writing and asked the broker to return the deposit. Which is TRUE?
Correct Answer: B
Rationale: When a contract is canceled in writing, the earnest-money deposit must generally be returned to the buyer unless there is specific authorization to withhold it. Option B accurately reflects this obligation.
Option A is incorrect; the broker cannot negotiate for a commission from the deposit without explicit agreement from both parties. Option C suggests that the broker can deduct a portion of her commission, which is not permissible without prior agreement. Option D incorrectly assumes that the broker has earned a commission simply because an offer was made, which is not valid until a transaction is completed. Thus, returning the deposit is the broker's primary responsibility in this scenario.
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