Contracts, Finance, and Transfer Practice Question
Question
A client asks whether a fact should be disclosed for the Michigan Real Estate Salesperson Exam involving earnest money and Michigan occupational licensing regulation. What should the licensee understand? (Item 170)
Answer choices
- A. The issue can be ignored if the parties want to close quickly.
- B. Recognize deposit handling and contract default implications in a way that fits Michigan exam practice.
- C. The rule applies only to commercial transactions and never to residential transactions.
- D. Client funds may be mixed with business funds if the broker reconciles the account later.
Correct Answer
B. Recognize deposit handling and contract default implications in a way that fits Michigan exam practice.
Explanation
The correct answer is B because earnest money requires candidates to recognize deposit handling and contract default implications. The Michigan reference keeps the scenario tied to state licensing practice, while the other options rely on unsafe assumptions about oral custom, escrow, client preference, independent licensee authority, or ignoring written duties.
Question details
- Difficulty: medium
- Domain: Contracts, Finance, and Transfer
- Objective: earnest money