Colorado License LawIntermediateColorado Exam
A Colorado broker who receives an earnest money check from a buyer, but the check bounces, must:
AA. Keep it private and try to re-deposit later, though specific requirements can vary depending on the transaction details
BB. Immediately notify the parties of the dishonored check and work to have the funds replaced as required by the contractCorrect
CC. Terminate the contract automatically
DD. File a police report only
Why B. Immediately notify the parties of the dishonored check and work to have the funds replaced as required by the contract Is Correct
Answer B: B. Immediately notify the parties of the dishonored check and work to have the funds replaced as required by the contract
When an earnest money check is dishonored (returned for non-sufficient funds), the broker must promptly notify both the buyer and seller. The buyer is typically required to replace the funds promptly per the contract.
Key Colorado 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.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
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