Definition
This is when a deal falls apart before closing. Depending on why it failed and what contingencies you had, earnest money might get refunded to you or kept by the seller. The right contingencies protect you here.
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Find my pathAbout this term
Cancellation before closing releases earnest money based on contingency status. Buyer's right if contingencies exist. Seller's right if contingencies removed. Dispute resolution required if unclear. Professional mediation resolves disagreements. Earnest money refund depends on termination cause. Breach by buyer loses earnest money. Valid contingency removal refunds money. Documentation essential. Attorney guidance recommended. Quick dispute resolution critical. Emotional and financial consequences significant.
Pro Tip
Understand your contingency rights before signing—they determine whether you can get earnest money back if something goes wrong.
Example
Cancellation due to failed appraisal contingency refunded earnest money to buyer.