Hawaii Pre-Licensing National Practice Exam 2025 – Your Complete All-in-One Study Guide to Exam Success!

Question: 1 / 400

When is a buyer entitled to a refund of their earnest money?

If the purchase agreement is signed

If the purchase agreement is terminated due to contingencies outlined

A buyer is entitled to a refund of their earnest money when the purchase agreement is terminated due to contingencies outlined in the contract. Contingencies are specific conditions that must be met for the sale to proceed. Common contingencies include the buyer being able to obtain financing, the property passing inspections, or the buyer being able to sell their current home.

If any of these contingencies are not satisfied and the buyer decides to terminate the agreement based on those conditions, they are typically entitled to a refund of their earnest money deposit. This helps protect buyers, allowing them to back out of the deal without penalty if the terms of the purchase agreement are not fulfilled.

In contrast, simply signing the purchase agreement does not guarantee a refund of earnest money, as the agreement is still in effect unless terminated per its terms. A price drop does not affect the buyer's entitlement to the earnest money, and the seller changing their mind would not automatically entitle the buyer to a refund unless it violates specific terms within the agreement, such as agreed-upon contingencies.

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If there is a price drop in property

If the seller changes their mind

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