How to use the earnest money forfeiture calculator
Korean civil law lets a seller cancel a sale by returning twice the deposit. US contracts have no double refund rule. Here the deposit works the other way: if the buyer breaches, the seller normally keeps the earnest money as liquidated damages, and if the seller breaches, the deposit comes back and the buyer may sue to force the sale.
Enter the purchase price, the earnest money you deposited, the liquidated damages percentage written into the contract, and which side is walking away. The calculator shows the deposit as a share of the price, the dollar value of the damages cap, and the amount actually at stake.
Legal basis (as of September 2026) — liquidated damages clauses are governed by state contract law. California Civil Code §1675 treats a residential liquidated damages clause as valid if it does not exceed 3% of the purchase price, and puts the burden on the seller to justify anything higher. Standard state association purchase agreements use similar language, and a clause that looks like a penalty rather than a reasonable estimate of loss can be struck down.
This calculator is for reference only and is not legal advice. Whether a contingency excuses performance and whether a damages clause is enforceable are fact specific. Consult a licensed attorney about your specific transaction.
Frequently Asked Questions
No. Returning twice the deposit is a rule of Korean civil law with no US counterpart. A US seller who breaches generally returns the deposit and may face a suit for specific performance or actual damages.
Usually yes if a contingency in the contract, such as financing, appraisal, or inspection, is exercised within its deadline. Walking away after the contingencies expire is what puts the deposit at risk.
California Civil Code §1675 presumes a residential liquidated damages clause valid at up to 3% of the price, and many standard contracts follow that figure. Your state and contract may use a different number.