Question

multiple choice question

which of the following statements is true regarding earnest money for a real estate sales contract?

• it is required by the real estate commission
• it is optional, but a good business practice
• it is required to make the contract valid
• it is required by state law

Explanation:

Analyze the legal requirements for earnest money

Earnest money is not legally required by state law, the Real Estate Commission, or to make a real estate sales contract valid (consideration in a contract is the mutual promises of the buyer and seller, not the earnest money deposit).

Evaluate the options

• "It is required by the Real Estate Commission" — Incorrect.
• "It is optional, but a good business practice" — Correct.
• "It is required to make the contract valid" — Incorrect.
• "It is required by state law" — Incorrect.

Answer:

• It is required by the Real Estate Commission
• It is optional, but a good business practice (Correct answer)
• It is required to make the contract valid
• It is required by state law