Real estate deals fall apart more often than many people expect. The National Association of REALTORS® reported in its April 2025 REALTORS® Confidence Index that 7% of contracts were terminated in the prior three months, up from 4% a year earlier. At the same time, buyers and sellers are still navigating financing pressure, appraisal gaps, inspection disputes, and disclosure issues in a market where each missed deadline can matter a lot. (NAR REALTORS® Confidence Index, CFPB closing guidance)
When a transaction unravels, people usually ask the same urgent questions: Who gets the earnest money? Can the other side sue? Is walking away allowed? What if the problem was the inspection, financing, or a low appraisal?
In this post, you’ll find ten of the most common questions buyers and sellers ask when a home sale collapses, along with a plain-English explanation of what these disputes often look like. If you want a broader overview of how breach claims, delays, earnest money fights, and failed closings fit together, this guide on sale-contract disputes and failed closings adds useful background.
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This is usually the first question, and often the most emotional one.
Earnest money is the deposit made under the purchase contract and typically held in escrow until closing or until the contract is terminated according to its terms. The Consumer Financial Protection Bureau recognizes it as a deposit tied to the purchase agreement, and NAR notes that these deposits often become nonrefundable after certain contractual deadlines pass, such as inspection, loan approval, or closing deadlines. (CFPB Regulation Z disclosure rule, NAR earnest money guide, NAR escrow overview)
In general terms, the answer depends less on who feels wronged and more on what the contract says, which contingency applied, and whether deadlines were followed.