Oregon Broker PSI Practice Exam

What phrase is used while writing a promissory note for earnest money?

1. At the buyer's discretion

2. At seller's acceptance

3. Upon closing

4. Prior to listing

The correct answer is: At seller's acceptance

The phrase "At seller's acceptance" is relevant in the context of a promissory note for earnest money because it signifies that the earnest payment is contingent upon the seller formally accepting the offer from the buyer. This ensures that the commitment to provide earnest money is tied to an agreement between both parties, establishing a mutual understanding and binding intention to proceed with the transaction. When earnest money is mentioned in a real estate transaction, it acts as a good faith deposit that illustrates the buyer's seriousness in pursuing the property. By aligning the earnest money payment with the seller's acceptance, it clearly delineates the moment when the buyer's commitment is required, thereby protecting the seller's interests until that point. In contrast, phrases that suggest timelines not directly related to the acceptance of the offer might not be suitable for clearly articulating the conditions surrounding the earnest money.