Texas Real Estate Brokerage Sales Apprentice Education (SAE) Practice Exam

What must happen for funds to be released if the transaction does not close?

1. A verbal agreement from one party

2. A court order

3. Written consent of all parties

4. A notice given to the title company

The correct answer is: Written consent of all parties

For funds to be released when a transaction does not close, the written consent of all parties involved is typically required. This is because the funds are held in escrow, and the escrow agent must have clear instructions on how to proceed. This written consent ensures that all parties agree to the terms under which the funds can be released, whether that be returning the money to the buyer, distributing it according to the agreement, or any other stipulated arrangement. Requiring written consent provides legal clarity and helps prevent disputes between the parties, ensuring everyone is on the same page regarding the disposition of the funds. A verbal agreement does not provide the same level of specificity and can lead to misunderstandings, while a court order might be necessary in more contested situations but is not a standard immediate requirement during a simple transaction failure. Simply giving notice to the title company will not suffice unless backed by the agreement of all parties. Thus, the necessity for written consent upholds the integrity of the transaction and protects the interests of all involved.