I still have their deposit so I also want to know if I have to notify them that they forfeited their deposit.

I am trying to stay out of the tribunal and out of court.I have heard stories that we are not allowed to collect a credit payment and not allowed to have the tenant forfeit any payment and if they don't go through with the purchase you need to pay everything back .

Both of which are forfeited in the event of a default.

@Allan Smith the security deposit is forfeited, as per our lease, for any lease violations.

I have already explained that breaking their lease would result in the forfeit of their security deposit.

You don't want to be limited to that, so focus on the fact that they broke your rules and thus they forfeit $X - which AirBNB probably won't allow to be more than whatever deposit you charge)

I am sure that the extent of the damages is the earnest money, which you have willfully forfeited.

In all my research, the landlord must forfeit at least the amount of the Security Deposit (sometimes it's 2 to 3 times the deposit, but again, this depends on the state).  

Their thinking is they gave you $xxxx.xx for the option payment, and they forfeit that of course. 

Is security deposit forfeited because of subletting which mentioned in the lease?