Contracts
Which of the following is true about earnest money in a South Dakota real estate contract?
AIt is always forfeited if the buyer defaults
BIt is required by law in all transactions
CIt demonstrates the buyer's good faith and is applied toward the purchase price at closing✓ Correct
DIt must equal at least 5% of the purchase price
Explanation
Earnest money demonstrates the buyer's good faith and is typically applied toward the purchase price or closing costs at closing. The amount is negotiable, and disposition upon default depends on contract terms.
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