Contracts
An Oregon purchase agreement contains an 'earnest money forfeiture' provision. Under what circumstances can a seller retain the buyer's earnest money?
AWhenever the seller chooses
BWhen the buyer defaults without a valid contractual right to cancel✓ Correct
CWhen property values decline after the offer is accepted
DWhen the seller finds a better offer
Explanation
In Oregon, the seller can retain earnest money when the buyer defaults — fails to perform their contractual obligations — without a valid contingency or right to cancel. Sellers cannot retain earnest money when the buyer properly exercises a contingency or terminates for a reason permitted by the contract. Disputes over earnest money often require both parties' signatures on a release form.
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