Definition
If you cancel the contract without a valid contingency to protect you, the earnest money you deposited goes to the seller as compensation. It's a serious financial consequence if you can't back out legally.
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Find my pathAbout this term
Non-refundable earnest money strengthens seller position. Buyer loses if cancels without cause. Contingency protection required for refund. Removal of contingencies risks earnest money loss. Strategic tool in competitive markets. Buyers often waive contingencies accepting this risk. Significant financial exposure. Only with full understanding. Seller recourse if breach. Earnest money as damages for breach. Contractual remedy. Seller incentive to enforce.
Pro Tip
Non-refundable earnest money is significant risk. Understand the consequences before putting down funds.
Example
Non-refundable earnest money of 3% ($15,000) was forfeited when buyer cancelled without cause.