Unfortunately, I didn't have anything in the lease language regarding this process.

75% of the time is a hard NO.  25% of the time is yes, with some more language in the lease/contract. 

I couldn’t deal with it while my daughter is in the car hearing her use foul language so I left.

Does that language come with your original agreement?

I have very explicit language in my rental agreement that the tenants are not to use the basement as a bedroom, too. 

We have no idea what language was in your quote/contract.

Originally posted by @Douglas Gratz:@Jay Hinrichs can you elaborate  a little, by what you mean "if county/city code precludes it then in my mind deal is dead"It depends on All of the Exact language in your contract….which might be interpreted differently by you and the buyer….hence, enter the attorneys.  

@Trent BurnsYes you need to, I always put at the end of the sales agreement “Buyer is a licensed real estate agent in the state of Pennsylvania.”Also I have had agents purchase property I have listed they include that same language as well.

If the buyer agrees with the additional fixes and their cost, and it does appraise at the needed amount, then the problem is solved.Your earnest monies should be refunded in this case, because the loan was turned down and that is the language of the agreement.

Account Closed, as for the specific questions about if you can back out and what would happen with the Earnest Money, I will echo the prior commenters that you need to carefully review the Agreement of Sale, and determine what the specific language and timing is related to any contingencies at all, and what happens to earnest money.