Buyer and Seller Defaults
In order for a Buyer to be entitled to a return of the earnest money, they will need to have a legitimate reason to walk away from a contract. Most of these are found in the contract and are known as contingencies of the sale in which a Buyer would be entitled to terminate a contract and a return of their earnest money.
It is much easier for a Buyer to terminate a contract than a Seller. A Buyer who defaults will generally lose only the earnest money they submitted. A Seller who defaults is subject to a much harsher consequence. They are bound by what is known as Specific Performance which is a part of the Colorado approved Contract to Buy and Sell Real Estate. To learn more about Specific Performance, you can listen to recording for this topic.