What happens if the buyer provides written notice to the seller under the contingency clause in TREC Form 40-9?

When the buyer provides written notice to the seller under the contingency clause in TREC Form 40-9, the correct outcome is that the earnest money is refunded to the buyer. This is an important aspect of real estate contracts that involve contingencies, which are conditions that must be met for the contract to proceed.

In many cases, contingencies can relate to various factors such as financing, inspections, or specific conditions outlined in the contract. If a buyer invokes a contingency, it typically indicates that an essential aspect needed to proceed with the transaction has not been satisfied. In this scenario, the buyer has exercised their right under the contingency, indicating their intent to withdraw from the contract based on the specific conditions stated.

As a result, the earnest money, which is the deposit made by the buyer as a show of good faith, must be returned to them. This action protects the buyer's financial interests and encourages fair dealings within the real estate transaction process. It underscores the principle that earnest money is not forfeited unnecessarily and can be refunded if the conditions of the contract are not met as pre-established.