Contracts
A buyer's earnest money is typically forfeited when the buyer:
ATerminates due to a failed financing contingency
BTerminates due to unsatisfactory inspection results within the contingency period
CDefaults on the contract without a contingency basis for termination✓ Correct
DExercises any contract contingency
Explanation
Earnest money forfeiture typically occurs when the buyer defaults on the contract without a contractual right to terminate. Properly exercising contingencies (financing, inspection, etc.) generally entitles the buyer to a return of earnest money.
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