Newsflash: Return of Buyer’s Deposit in Massachusetts

We’re selling our condo in Massachusetts, but we’ve gotten some weird comments from our agent suggesting that the buyer might be looking for a way out of the deal even though we’ve signed the P&S agreement and are supposed to close next week. They waived all contingencies with their offer. The 5% that they put down when they signed the P&S is in escrow. I want to get the deal done and am hoping that it’s just first time buyer jitters, but my mind has started racing with tons of questions about what happens if they walk. If they walk away from the deal, our agent said that we don’t automatically get to keep the 5%, as the release of the funds needs to get mutually agreed upon. I guess you negotiate some sort of split. Question: If the split isn’t negotiated, do those funds just stay in escrow forever? If the funds haven’t been released because we can’t come to an agreement on a split, am I still allowed to relist and sell the condo? Or does having those funds in escrow hold everything up? Any idea of what the tax treatment is of whatever I get as part of the deposit? Is that income?