And the tenant does not automatically forfeit the security deposit if he breaks the lease.Only a lawyer can give you the right answer, and only you can decide if it's worth involving a lawyer for $950.

In most states a "security deposit" taken by a landlord is regulated by statute, you can't require the tenant to forfeit a deposit and often deposits are to be held in an escrow account!

I just was looking on the state website and saw that our HOA was forfeited in 1997.

At what point did you see the home and if you had walked away from the deal how much EM would you have forfeited?

And, someone breaching a contract that forfeits their EM, and you actually collecting that EM, can be two different things.

Try to work out an arrangement.Would you be willing to let him walk if he forfeits the security deposit?

If Buyer chooses not to purchase the property at the end of the term, they would forfeit the option fee, but be refunded half of the money in escrow.

Forced closing and / or forfeit your deposit? 

I told her about the clause in the lease and that she would be forfeiting her deposit etc. 

You may also have less contact with the borrower and forfeit some control on what decisions are made when a foreclosure is called for.