Return of down payment
UPDATED: Sep 30, 2022
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Return of down payment
I’m selling small turn key restaurant. Guy made offer which was accepted
and put 1000.00 down payment. When met up two weeks later for final
payment and sign lease he backed out. Since I stopped showing the place
and turned away perspective buyers does he get his money back since he
is the one that backed out at the last minute.
Asked on March 14, 2017 under Business Law, New Jersey
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 5 years ago | Contributor
No, he does not get his deposit back. The purpose of the deposit is to ensure performance by giving the buyer some reason to go through with the transaction, or else lose the deposit. In this case, he breached the agreement, by not carrying through with the purchase; his breach entitles you to keep the deposit. Had it been you who was unable or unwilling to continue, you'd have to repay the deposit--you can't refuse to perform and keep the other side's money. But that is not the situation here.
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