Contracts
What is 'earnest money' in a Rhode Island real estate transaction?
AThe commission paid to the listing agent
BA good faith deposit made by the buyer to demonstrate intent to purchase✓ Correct
CThe lender's origination fee
DThe seller's cost of preparing the property for sale
Explanation
Earnest money is a good faith deposit made by the buyer to demonstrate serious intent to purchase the property. In Rhode Island, it is typically held in an escrow account by the listing broker or an attorney pending 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.
EscrowA neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
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