Housing and Community Development (HCD) Practice Exam

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Before closing a sale, what is required regarding the deposit?

The deposit must be refunded if not used
Buyer must be informed of withholdings on the deposit
Both A and B
Confirmation of payment must be provided

The correct answer is: Buyer must be informed of withholdings on the deposit

The requirement that the buyer must be informed of withholdings on the deposit is critical for ensuring transparency in the transaction. It helps buyers understand any conditions that could affect the return of their deposit, such as potential fees or deductions if the deal does not go through. Clear communication about the implications of the deposit is essential for fostering trust and preventing disputes between parties involved in the sale. The other options touch on important aspects of deposit handling and refunds but lack the necessary emphasis on the buyer's right to be informed about specific terms related to the deposit. While refunds can be a factor if a sale does not proceed, the key component highlighted in the correct answer is the obligation of the seller to clearly inform the buyer about any conditions applied to the deposit, ensuring that buyers can make well-informed decisions.