Definition
The loss of earnest money or other funds by the buyer when they default on the contract without valid cause. Forfeiture is the seller's remedy for buyer breach.
Not sure where this fits?
Answer a few questions and we’ll open the path that fits, at the right step.
Find my pathAbout this term
Forfeiture is a serious consequence of defaulting on the purchase agreement. When a buyer breaches the contract (such as failing to close without justification), the seller may keep the earnest money and pursue additional damages. However, forfeiture is limited by the contract terms and state law, and the seller must have actually been damaged by the breach to collect.
Pro Tip
Include strong contingencies in your offer to protect your earnest money if circumstances change.
Example
Because the buyer failed to obtain financing and didn't have a valid financing contingency, the earnest money was forfeited to the seller.