In an exclusive right to sell property listing agreement, what must occur if a deposit is forfeited by a prospective buyer?

In an exclusive right to sell property listing agreement, if a deposit is forfeited by a prospective buyer, it is essential that both the buyer and seller sign a written agreement regarding the forfeiture. This requirement is crucial because it helps to ensure that both parties acknowledge and agree to the terms of the forfeiture of the deposit.

When a buyer forfeits their deposit, it's often due to a breach of contract or failure to fulfill certain conditions of the sale. A written agreement documenting this situation protects the rights of both parties and clarifies the handling of the forfeited funds. Without such an agreement, disputes could arise regarding the proper allocation of the deposit, making it more difficult to bring resolution if issues arise later.

This process also reflects legal best practices in real estate transactions, ensuring transparency and communication between both parties, which is fundamental in maintaining trust and mitigating potential legal issues.