If a house down payment is not refunded, the buyer should first review the purchase agreement for refund terms and deadlines. They must then document all communications with the seller or lender, including emails, contracts, and payment records. Next, the buyer should send a formal written demand letter outlining the refund request and specifying a response deadline. If unresolved, the buyer should consult a real estate attorney or file a complaint with the Consumer Financial Protection Bureau (CFPB) or state housing authorities. Legal action, such as small claims court or litigation, may be necessary if the seller or lender violates refund policies or applicable laws.

The importance of these steps stems from statutory protections and common law remedies for refund disputes. For example, the CFPB’s 2022 report found that 28% of homebuyers encountered refund issues due to unclear contract terms, with 65% of cases resolved through formal complaints or legal action. State laws, such as California’s Civil Code § 2923.5, mandate refund policies for earnest money deposits, requiring sellers to return funds within 3–30 days unless specified otherwise. Data from the National Association of Realtors (NAR) reveals that 12% of homebuyers in 2023 reported non-refunded deposits, costing an average of $15,000 per case. Legal demand letters are effective in 40–60% of cases, as they pressure parties to resolve disputes without litigation, which averages $3,000–$10,000 in legal fees. Small claims courts handle 80% of refund disputes successfully, with median awards of $5,000–$15,000. Proactive documentation and legal escalation are critical to maximizing recovery and deterring future violations.