Then there would have been a commitment date set in the Agreement of Sale. That date is important because the buyer (as well as the buyers agent) would have received a commitment letter from the lender which details what the buyer still need to do to get the loan. Most of the time (if the lender is worth the salt) the letter would only have a couple of items in there such as proof that the buyer still has a job.
The material facts have changed and the lender has no liablilty. The buyer and/or their lawyer should have notified you immediately.
Best of luck,
I also agree with Corey the Pre-approval is kind of a joke in our business. It is full of so many holes on how the lender can get out of approving a loan it is not funny. What you want next time is a Loan Approval Letter without contingencies.
I hope this helps.
If you go to my website you can go under RESOURCE tab there is contact information if you feel you need legal assistance to find out your true rights regarding the transaction referred to in your question.
Good luck and please let me know if I can be of any further assistance. Chris
Also, I am sure the preapproval was subject to something....appraisal, title, income reverification.
Check to see what they were denied for. If it was fraud, keep their deposit.