Humber/Ontario Real Estate Course 3 Exam Practice

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What is the correct action for a salesperson if a buyer backs out of an agreement before closing?

  1. Negotiate a new purchase agreement with the buyer and seller.

  2. Inform the seller and suggest consulting a lawyer for potential legal actions.

  3. Offer to help the buyer find another property.

  4. Immediately release the buyer from the agreement without any penalty.

  5. Wait until the closing date to address the issue.

  6. Request the buyer deposits an additional amount as a penalty.

The correct answer is: Inform the seller and suggest consulting a lawyer for potential legal actions.

The correct action for a salesperson when a buyer backs out of an agreement before closing is to inform the seller and suggest consulting a lawyer for potential legal actions. This step is vital because it ensures that the seller understands their rights and options in response to the buyer's decision. Consultation with a legal professional can clarify the implications of the buyer backing out, especially regarding any potential penalties, the return of deposits, and possible legal recourse that the seller may have due to the breach of contract. This action also helps maintain the professional integrity of the salesperson and upholds the fiduciary responsibility to the seller. In real estate transactions, it is important to navigate such situations with proper legal guidance to avoid misunderstandings and to facilitate the best potential outcome for the seller. Other options, while potentially beneficial in different contexts, do not prioritize the legal implications and necessary communication that the situation demands. For example, negotiating a new purchase agreement would not be appropriate without first understanding the legal situation. Offering to help the buyer find another property or waiting until the closing date would also not address the immediate legal needs of the seller. Releasing the buyer from the agreement without penalty and requesting additional deposits as a penalty may not be within the salesperson's authority and could further complicate matters

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