Affiliate Broker Tennessee (TN PSI) National Practice Exam `

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Study for the Affiliate Broker Tennessee National Exam. Practice with flashcards and multiple choice questions, with hints and explanations. Prepare well for your licensing exam!

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What happens if an earnest money deposit is not delivered on time?

No obligation created
Contract becomes void
It may lead to legal consequences
It is forgiven by the seller

The correct answer is: It may lead to legal consequences

If an earnest money deposit is not delivered on time, it may lead to legal consequences. In real estate transactions, an earnest money deposit serves as a show of good faith from the buyer to the seller. Timely delivery of this deposit is typically a condition outlined in the purchase agreement. Failure to meet this obligation can create uncertainty regarding the commitment of the buyer and might result in disputes between the parties involved. Legal consequences could include the seller's right to terminate the contract or seek damages for any losses incurred due to the buyer's failure to provide the deposit on time. It's important to note that the specific ramifications can vary based on the terms of the contract and the laws governing real estate transactions in the relevant jurisdiction. Thus, the importance of adhering to the timeline for documents and deposits is underscored to protect both parties involved in the transaction.