Mortgage default

Unless there's a mortgage non-contingency clause written into the contract, keeping the deposit would be classified as "stealing".

Nice try.

Um, I think your attorney provided you with all the guidance you need: Return the Deposit

Arfie: Do I need to return the deposit?
Attorney: Yes
Arfie: But I asked people on streeteasy and some said I don't have to
Attorney: Good enough for me, you can keep the deposit!!!

i agree: just keep the deposit and sell the place again.

It all depends on the terms of your contract.

>Does anyone know under what circumstances a seller can retain the deposit on a failed condo sale?

With no mortgage contingency in the contract.
A time of the essence date just about guarantees you can keep it.

>Our attorney would like to declare them in default but says we will have to return their deposit.

Unless your attorney is a full retard, he is already aware there was a mortgage contingency in the contract by telling you this.

>Apparently, the buyers have not submitted the paperwork required by Citibank in a timely fashion.

For several possible reasons and that is if this excuse given is accurate. They didnt submit paperwork required because they new sending it would hurt their chance of the mortgage (banks do throw monkeywrenches in the process on occasion,and especially these last 2 years),or they changed their mind on the purchase and using the bank for an excuse, whether they are purposely not sending the info or there is phantom info to send.

>Can anyone offer any guidance?
The one that seemed in the hand is now none in the hand or the bush. Move on and think about what you do and don't want in the next buyer and contract.