Contracts
In Tennessee, a 'release of earnest money' form is signed when:
AThe buyer takes possession of the property
BThe parties agree to return or disburse earnest money after a contract falls through✓ Correct
CThe closing is complete
DThe mortgage is approved
Explanation
When a contract fails to close, the parties typically sign a release authorizing the broker or escrow agent to disburse the earnest money to the agreed recipient (buyer, seller, or split) based on the contract terms.
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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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