A tug of war over the earnest money

A buyer backed out of purchasing my home and has asked for his earnest money back, but I think I'm entitled to keep his earnest money. He didn't cancel during the option period, and he hasn't given any other legitimate reason for backing out of the deal. How do I prove that I'm entitled to the earnest money? Also, can I continue to look for other buyers while I try to settle the earnest-money issue? If you and the buyer can't agree on who is entitled to the earnest money, it's prudent to settle that issue before putting your home back on the market. Getting the first contract formally terminated will ensure you can sell your home to someone else without risking a lawsuit that could stop that second transaction. Regarding your dispute with the buyer over the earnest money, Texas Real Estate Commission contracts require buyers and sellers to try to resolve disputes in mediation before heading to court If you're intent on putting your house back on the market before resolving your earnest-money dispute, keep in mind that many title companies will refuse to process a second transaction if the first contract has not been officially terminated. If that does not dissuade you, you should consult an attorney concerning the risks of proceeding with a subsequent sale of the property without a settlement of the earnest-money issue.