Legal Question in Real Estate Law in California

No deposit or other funds can be released from escrow without all parties written instructions. If you defaulted on the contract, you will need to negotiate the best deal you can with the seller.

It depends on the wording of the contract between the buyer and seller and the escrow instructions.

I write to clarify the previous answers. Most real estate purchase/sale contracts in which the buyer will have to obtain a mortgage should have a "loan contingency." The standard Cal. Assn. of Realtors forms have this. What it means if that provision on the form is checked is that the buyer has a certain amount of time to notify the seller if the buyer has gotten a loan. If the buyer does not notify the seller that they have gotten a loan within that time the seller can continue to wait or can issue a demand for performance. Once a demand for performance is issued, the buyer must either remove the contingency if they have gotten a loan, or decline to remove the contingency if they have not. At that point either party can cancel the contract without penalty, or they can agree to wait while the buyer tries other lenders. As long as the contingency is not removed the buyer is not liable for canceling the contract due to inability to get a loan, and once the contingency removal deadline has passed the seller is not liable for canceling the contract if the buyer does not remove the contingency upon demand.