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Buying & Selling a Business

Can I get my deposit back if the seller is the one who backs out, not me?

TSL Written by the Treadstone Law team· Updated August 2026

Generally, yes. If the seller is the one who breaches the purchase agreement by backing out without a valid legal basis, the buyer is typically entitled to have the deposit returned, and usually has a further claim for any additional losses the failed deal caused beyond simply getting the deposit back. A seller's unjustified refusal to close doesn't give that seller any right to keep money paid toward a deal they themselves failed to complete.

Practically, this comes down to where the deposit currently sits and what the agreement says about its handling. Deposits are commonly held in trust by one of the lawyers (often the seller's) rather than released to either party until a defined event under the agreement occurs, precisely so a dispute like this doesn't turn into a fight over money that's already been spent. If the deposit was already released to the seller before the breach became clear, recovering it becomes a separate collection question rather than simply asking the lawyer holding it to send it back.

Key takeaways

  • A seller's unjustified breach generally entitles the buyer to the deposit back.
  • The buyer may also have a claim for further losses beyond the deposit itself.
  • Deposits are typically held in trust rather than released early, precisely for this reason.
  • An already-released deposit turns this into a collection question rather than a simple return.
This is general information, not legal advice. It doesn’t create a lawyer–client relationship, and the rules can change. For advice on your situation, a Treadstone business lawyer can help.
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