Not sure how unique of a situation I have on my hands.  The seller re-signed a 5yr cable contract last November for a 16 unit we are 10 days away from closing on.  As a contingency, I required proof of the cancellation of the cable contract, to which he complied by providing a letter (on his letterhead) with a cancellation number cable company gave him.  Date of termination effective the 27th of September, same day as closing.  We then proceeded with the inspection and bank appraisal (roughly $3,500).  We are now 10 days away from closing, I'm set and ready to go, and he came back saying the cable company threatened to slap a lien on the property for the balance of the contract ($28k).  He said he is not paying the remaining balance and asked if I wanted to take over, to which I replied absolutely not.  His attorney sent the cable company a letter and they are trying to get it reduced to a pre-payment penalty, which they feel they can accomplish.

So, my question is, has anybody been in a similar situation where the seller agreed to an up-front contingency like this where it's not inspection-related, you proceeded through the due diligence phase, and then they backed out?  If so, did you recoup your due diligence monies, and how?  It seems only fair that I receive my ~$3500 back if he backs out as I wouldn't have proceeded without the cancellation letter (clearly spelled out in the contract).  Look forward to hearing your thoughts and experiences.  Thanks all!