Contracts
In New York, an 'earnest money' deposit serves the purpose of:
APaying the broker's commission at signing
BDemonstrating the buyer's good faith and commitment to the purchase, and providing compensation to the seller if the buyer defaults✓ Correct
CPaying the seller's carrying costs until closing
DSecuring the buyer's right to a mortgage
Explanation
Earnest money (the contract deposit) in a New York real estate transaction demonstrates the buyer's serious intent and good faith. It also serves as security for the seller — if the buyer defaults without a valid contractual excuse, the seller may retain the deposit as liquidated damages.
Related New York Contracts Questions
- In New York, a real estate broker's claim for a commission is typically based on:
- A 'time is of the essence' clause in a New York real estate contract means:
- A 'right of first refusal' in a lease or purchase agreement gives the holder the right to:
- In New York, when a seller provides a property condition disclosure statement, it must be provided to the buyer:
- In New York, an 'as is' sale contract provision means the seller:
- In a New York real estate transaction, earnest money (contract deposit) is typically held by:
- In New York, a 'letter of intent' (LOI) in a commercial real estate transaction:
- In New York, a 'binder' in a real estate transaction is:
Practice More New York Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free New York Quiz →