Contracts
What is an 'earnest money deposit' in a real estate transaction?
AThe agent's advance commission
BA good-faith deposit made by the buyer to show serious intent to purchase✓ Correct
CThe seller's equity in the property
DThe lender's origination fee
Explanation
An earnest money deposit demonstrates the buyer's good-faith intent to complete the purchase. It is credited toward the purchase price at closing. If the buyer defaults without a valid contingency excuse, the seller may retain the deposit as liquidated damages.
Related California Contracts Questions
- What happens to an offer if it is not accepted before the stated expiration time?
- A contingency in a purchase contract:
- Under California law, which of the following is NOT a required element for a valid real estate contract?
- In California, a real estate purchase contract entered into by a minor (under 18) is:
- What is 'specific performance' as a legal remedy in real estate contracts?
- In California, a counteroffer by the seller has what legal effect on the buyer's original offer?
- Which type of contract listing gives the broker a commission only if the broker personally finds the buyer?
- Under California law, a real estate commission agreement is enforceable only if it is:
Practice More California Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free California Quiz →