They're gonna charge you an arm and a leg to go to arbitration. first thing, call the nj division of consumer affairs and make a claim against his surety bonds.

If the investor is unable to secure funding then they're essential out their deposit or it sits in limbo until its arbitrated/negotiated.I'm not a flipper per se, but I would think it advisable to structure an EMD say as 2-3% initial deposit with the remainder due at the end of the due diligence period.

Check your Governing Documents for options...some require Mediation or Arbitration, sometimes Court is the only option.

Make sure you contract includes: amortization schedule, if you are doing monthly payments include a due date and amount as well as payment method (snail mail address especially), rights and responsibilities of heirs to loan (including transferability), and i(f you want it) whether mediation and arbitration is required before lawsuit (some lenders prefer this).  

Among the most significant of these rules are those that require that all MLS participants, non-members as well as members, to arbitrate disputes with other participants, and that impose narrow limitations on the manner and extent to which seller-clients of other participants may be solicited.3.

Also, the state of formation is likely where internal disputes would be brought among LLC members, so if you and a partner and/or spouse live in CA, you probably want to arbitrate in CA if the two of you had a disagreement.

You probably have arbitration which generally sides with buyer especially if you did not have a buyer agent.

Do you have arbitration in your contract? 

Your Governing Docs, or local law, will tell you if you have Arbitration or Mediation available as an option for dispute resolution.

But in my 40 some years I never have and that spans lending building developing flipping sub too foreclosure sales you name it.Can't say it would never happen but the facts are in civil litigation if you do get sued these are 99% of the time settled in mediation and or arbitration...