Manufactured Housing Practice Test

What is required from an escrow agent when a buyer demands their deposit back?

1. Notify the buyer of the cancellation of the sale

2. Refund all funds to the dealer

3. Wait for a court order before acting

4. Return the funds contingent upon dealer's agreement

The correct answer is: Notify the buyer of the cancellation of the sale

The requirement from an escrow agent when a buyer demands their deposit back is to notify the buyer of the cancellation of the sale. This action is significant because the escrow agent serves as a neutral third party responsible for managing the funds involved in the transaction. Upon receiving a request for a deposit refund, the agent must confirm that the cancellation is valid and communicate this to the buyer, ensuring clarity and proper documentation regarding the transaction's status. In this role, the escrow agent must follow any established protocols while keeping all parties informed. This ensures that the buyer understands their rights regarding the deposit and the reasons behind the cancellation. It is essential for maintaining transparency and trust throughout the process. In this context, the other options do not accurately represent the responsibilities of the escrow agent. For instance, refunding all funds to the dealer would not be appropriate unless the dealer agrees to it, while waiting for a court order would unnecessarily prolong the process. Returning the funds contingent upon dealer's agreement might complicate matters since the agent’s primary duty is to act according to the buyer’s instructions following proper notification of cancellation.