Final answer:
The correct answer is that the seller may sue the buyer for breach of contract if the buyer backs out without a legal contingency. Whether the buyer can get their earnest money back depends on the terms of the contract. The bank typically cannot sue the buyer unless there was a separate agreement allowing for this. The correct option is B.
Step-by-step explanation:
If a buyer makes an earnest money deposit on a property and signs a contract that is contingent on specific financing terms, and the bank commits to the financing but the buyer decides not to proceed with the purchase, the following may apply: If the contract's financing contingency is satisfied and there are no other contingencies the buyer can legally rely on to terminate the contract, the seller may sue the buyer for breach of contract.
This is because the buyer has made a legal agreement to purchase the property and by backing out without legal grounds, they are breaking that agreement.
Regarding the earnest money, typically, whether the buyer can receive it back depends on the terms of the contract and compliance with those terms. If the buyer backed out for a reason not covered by the contract contingencies, they are likely not entitled to the return of the earnest money deposit.
As for the bank, it would generally not have grounds to sue the buyer unless the buyer had specifically entered into a separate agreement with the bank that included provisions for such an action, which is uncommon. The bank's recourse is typically limited to the terms of the loan agreement, which the buyer may not have formally entered if the property purchase was not finalized.