When can a broker refund an earnest money deposit to a buyer without notifying the commission?

A broker can refund an earnest money deposit to a buyer without notifying the commission specifically when financing cannot be obtained. Typically, earnest money is used to demonstrate a buyer's serious intent to purchase a property, but if the buyer is unable to secure financing, this is usually considered a valid reason for the return of the earnest money. The rationale here is that if the buyer is unable to complete the purchase due to financial constraints, there is a legitimate basis for the refund, and the broker does not need to involve the commission in this straightforward situation.

In contrast, when the buyer requests a refund without any specific reason related to the conditions of the contract, or if the property simply does not close but other conditions have not been met, the broker may need to review the specifics of the sales contract and any contingencies before processing a refund. Similarly, if the contract is revoked, this could imply varying circumstances that may require further investigation or notification to the commission, again depending on the terms established in the agreement. Thus, in the case of financing issues, the broker has a clear and immediate basis for acting without needing to involve the commission.