If a buyer cannot close due to insufficient funds, which action cannot the seller take?

The best choice in this scenario is that the seller cannot keep any earnest money paid by the buyer and sue for punitive damages. In a real estate transaction, earnest money serves as a show of good faith from the buyer to indicate their commitment to the purchase. If the buyer is unable to close the deal due to insufficient funds, the seller's recourse typically involves negotiating terms rather than resorting to punitive actions.

The option highlights that punitive damages, which are intended to punish a party for wrongdoing, are generally not applicable in situations involving real estate contract breaches resulting from financial insufficiency. Under standard legal and contractual practices, the seller's remedies would focus on negotiation and adherence to the terms of the purchase agreement rather than punitive action against the buyer.

The other options reflect potential actions the seller can take in this scenario. Rescinding the purchase agreement is a standard response to unmet contingencies. Mutually agreeing to modify the contingency allows adjustments to make the deal feasible for the buyer. Agreeing to delay the closing is also a practical approach to provide the buyer more time to procure the necessary funds to complete the transaction. Together, these options focus on resolution and collaboration rather than punitive measures.