Contracts
Under the TREC Residential Contract, if both buyer and seller default, the resolution of the earnest money requires:
ATREC to mediate
BWritten agreement of both parties or a court order✓ Correct
CAutomatic return to the buyer
DAutomatic forfeiture to the seller
Explanation
When both parties claim the earnest money (or when there is a dispute), the escrow agent (title company) cannot release the funds without written authorization from both parties or a court order. This protects the escrow agent from liability for disbursing to the wrong party. TREC contracts often include mediation provisions for disputes.
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