Contracts
In South Dakota real estate transactions, the 'earnest money' deposit serves primarily as:
AA non-refundable fee paid to the listing agent
BEvidence of the buyer's good faith and commitment to the purchase, and potentially liquidated damages if the buyer defaults✓ Correct
CA government-required transaction tax
DThe initial payment toward the purchase price included in the down payment
Explanation
Earnest money demonstrates the buyer's good faith and commitment to the transaction. If the buyer properly performs under the contract, it is typically credited toward the down payment or closing costs at settlement. If the buyer defaults without a valid contingency, the seller may be entitled to retain it as liquidated damages.
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