With rising interest rates and more stringent lending standards for both residential and commercial properties, security deposit disputes caused by buyers’ inability to satisfy pre-closing purchase-financing conditions are also increasing.

A typical real estate contract provides a 30-day period from the contract’s signing for the buyer to obtain purchase financing. The contract often specifies basic loan terms that the buyer will seek to obtain from a lender, including: the loan amount, whether the loan is conventional or otherwise, the interest rate and whether the interest rate is fixed or variable.