Exits the contract itself provides
Most contracts allow cancellation only for specific reasons, such as a failed mortgage contingency or a title problem the seller cannot fix. Each of these usually comes with notice requirements and deadlines, and a buyer who misses a deadline under a mortgage contingency, for example, may lose the right to cancel under it. When a seller cannot deliver insurable title, many contracts limit the seller's obligation to returning the down payment and covering certain title costs. Reading the cancellation clause before sending any message saying you are out is the safest starting point.
When one side simply walks away
In New York, a buyer who defaults without a valid contractual reason often loses the down payment, and many contracts treat that as the seller's main remedy. A seller who refuses to close without a valid reason may face a claim to return the down payment and costs, or a lawsuit asking the court to order the sale, often accompanied by a notice of pendency against the property. Courts generally require the side seeking to enforce the contract to show it was ready and able to close. Who sent which notice, and when, frequently decides these cases.
The escrow and the next step
The down payment is usually held by an escrow agent, often the seller's attorney or a title company, who normally will not release it while the parties disagree unless the contract's escrow procedure or a court order allows it. Gather the contract and riders, every notice exchanged, the loan commitment or denial letters, and the title report. Our review starts with the exit terms, then any deadline still running, and then whether a negotiated release, a closing on adjusted terms, or litigation makes the most sense.
