Earnest Money Clauses
Read the short text about earnest money clauses, then select the correct option from the list to complete (1) ….. to (10) ….. .
Under the Hungarian Civil Code, there are various measures which may be stipulated in contracts to ensure ___1___ performance. One of them is earnest money, which is a kind of ___2___ payment and bears serious legal consequences, depending on whom the breach of contract is attributable to.
Earnest money is ___3___ by a buyer to demonstrate serious intent and commitment to completing a transaction in other words to proceed with the___4___. An earnest money clause is a provision commonly found in real property transactions, and specify the amount of the earnest money, which is often a ___5___ of the total purchase price. Earnest money clauses also outline the timeframe within which the buyer must deposit the earnest money after the contract is___6___. The earnest money is usually held in an escrow account, a neutral ___7___ account. This ensures that the money is safely held until the ___8___ of the transaction.
If the sale is successfully completed, the earnest money is ___9___ toward the purchase price. However, if the buyer fails to proceed with the purchase for reasons not allowed in the agreement, the earnest money may be ___10___ to the seller. If the breach of contract is attributable to the seller they have to refund twice the amount of the received sum.
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