Alaska License LawIntermediateAlaska Exam
When a buyer terminates a purchase agreement without a valid contractual reason and forfeits earnest money, the broker:
AMay immediately disburse the funds to the seller
BMust hold the funds in trust until directed by all parties or a court orderCorrect
CMust return the funds to the buyer within 5 days
DMay deduct the commission from the forfeited deposit, under standard practice
Why Must hold the funds in trust until directed by all parties or a court order Is Correct
Answer B: Must hold the funds in trust until directed by all parties or a court order
When there is a dispute over earnest money, the Alaska broker must continue to hold the funds in trust until there is written agreement from all parties about disbursement or a court order directing distribution. Brokers cannot unilaterally decide the outcome of a disputed deposit.
Key Alaska License Law Terms in This Question
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Key Terms to Know
Earnest Money
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
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