When is the good-faith deposit on a CRE term sheet refundable to the borrower?

How to maximize refundability at the term-sheet stage

Cap the lender's expense reimbursement to a defined dollar amount. Open-ended is the lender's standard draft and creates surprise charges (typically lender legal overruns) that erode the deposit refund.

Require itemized invoices for any third-party costs charged against the deposit. Lender legal, third-party reports, and travel must be documented; without that requirement, the refund accounting becomes opaque.

Define lender-side good-faith pursuit of commitment. Lender draft typically does not specify what the lender must do to advance the deal; without a defined obligation, a lender that loses interest can slow-walk the deal and force the borrower to either wait or forfeit. Push for a defined commitment-issuance deadline (typically 45 to 60 days from term-sheet acceptance).

Define what constitutes a deal-killing diligence finding so the borrower retains the right to walk with deposit refund. Specific triggers: appraisal more than 10% below the underwriting value; Phase II finding with remediation cost above a threshold; PCA finding immediate-need repair above a threshold; title or survey defect not curable within the closing timeline.

Lender-internal-credit refundability: when the lender's own credit committee declines or materially restructures the deal in ways outside the term-sheet parameters, the deposit should be refundable. This is the most common silent retrade: the lender comes back with a modified structure and the borrower has to choose between accepting or walking and forfeiting the deposit.