I have been involved in many disputes regarding earnest money. I have represented both buyers and sellers.

Earnest money is nomally held by the seller's broker in residential sales and by a title company in commercial sales. This is money the buyer puts up to hold the property while the buyer secures financing for the deal or investigates the property. Normally sellers want 5 to 10% of the sales price to show that the buyer is serious in buying this property.

The seller will give the buyer 30 to 45 days to obtain final mortgage approval. The sale of the property is then contingent on this financing.

Sometimes this financing deadline passes and the buyer does not notify the seller that the buyer could not obtain financing. Or just before closing the mortgage company withdraws its approval. Or if the seller made material changes to the property from the contract date to the date of closing.

If the deal doesn't happen the buyer doesn't want to loose his money and the seller wants the money for the seller's damages. A judge will decide the issue.

In those case the lawyer needs to examine carefully the contract, the negotiations, any oral agreements between the parties, any potential lawsuits against the mortgage brokers to protect his client.