Earnest Money Forfeiture

Definition

When a buyer loses their earnest money deposit due to contract breach—the penalty for changing your mind with no valid excuse.

Example Usage

By backing out without a valid contingency claim, the buyer forfeited their $20,000 earnest money deposit.

Origin

Contract law principle, standard in real estate transactions

Fun Fact

Earnest money forfeiture is usually split between the seller and the listing/selling agents—everybody wins except the buyer.

Source: Contract Law Standards

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