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The contract was terminated due to the other party's fault; can I recover the down payment through litigation for the return of the down payment?

I paid a down payment when entering into a real estate contract, but the contract did not proceed normally due to circumstances on the other party's side. From my perspective, I believe the contract was terminated due to the other party's responsibility. However, the other party is refusing to return the down payment, which is a frustrating situation. I would like to know whether, even in such a case, I can recover the down payment through litigation for the return of the down payment, and whether there are cases where the return is denied even when the other party's fault is clear.

litigation for the return of the down payment

Answer

Published: 2026-01-23

Author : Kuk Il KIM

Hello. This is a civil litigation attorney at Daeryun Law LLC.

Even if the contract was not performed due to the other party's fault, it cannot be concluded that you will necessarily recover the down payment through litigation for the return of the down payment.

This is because, even if a cause attributable to the other party exists, whether the legal requirements for the return of the down payment are satisfied is determined separately.

For the return of the down payment to be recognized, the mere assertion that “the contract was terminated due to the other party's circumstances” is not sufficient.

(*Note: Rescission of a contract extinguishes the contract retroactively, whereas termination differs in that it ends only the effect from the point of termination onward.)

What the other party's obligations set out in the contract were, whether those obligations were actually not performed within the performance period, and whether that placed the contract in a state where it could be terminated are reviewed together.

For example, if the balance payment date has not yet arrived, or if the delay in performance is merely a temporary circumstance, it is difficult to regard the other party's responsibility as clear, and the return of the down payment may be denied.

In addition, the manner and timing of the contract's termination are also important factors in the determination.

Even if there is a cause attributable to the other party, if you terminated the contract without meeting the requirements for termination, whether the termination was lawful may first become an issue in litigation for the return of the down payment.

If the termination is not recognized, the return of the down payment is likewise unlikely to be accepted.

Ultimately, even when you feel that the other party is responsible, it is important to first examine how that responsibility may be evaluated in light of the contents of the contract and the requirements for termination.

Because the possibility of recovering money through litigation for the return of the down payment varies greatly from case to case, we recommend that you organize the contents of the contract and the circumstances of the termination together with a civil litigation attorney.