Contracts
A Michigan buyer's offer includes a $5,000 earnest money deposit. If the seller accepts and the buyer is unable to secure financing under the financing contingency, the buyer:
AForfeits $2,500 as a penalty
BReceives the full $5,000 earnest money back✓ Correct
CMust pay the seller a 1% cancellation fee
DReceives back $5,000 minus agent costs
Explanation
If the buyer properly invokes the financing contingency after a good-faith effort to obtain financing, they are entitled to a full return of their earnest money deposit. The contingency excuses the buyer's non-performance.
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