Contracts
In Minnesota, 'earnest money' is best described as:
AThe buyer's down payment paid at closing
BA deposit made by the buyer to show good faith and secure their interest in the property✓ Correct
CThe seller's commission to the listing broker
DA fee paid to the title company to open escrow
Explanation
Earnest money is a good-faith deposit made by the buyer when submitting an offer, showing serious intent to purchase. It is held in trust and applied to the purchase price at closing.
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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.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
EscrowA neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
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.
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