Read the terms properly - does it state must execute SPA within 14 days or is it just send a draft copy of SPA within 14 days. Different letters of offer to purchase will word it differently.

And when you said that the buyer only sent the SPA over on 3/8/11, is it a draft of the SPA or is it a finalised one whereby both parties had already started with several drafts beforehand.

If the buyer slept on it for 14 days and did nothing, there would be a right to forfeit. However, if a draft has been sent out and parties were in negotiations to finalise it, then the period would be extended accordingly.

Must also take into consideration as to whether you, as the seller, had provided all the necessary documents for the purchaser to prepare the SPA in the first place.

So, it depends on the facts of the case. How's yours? 

Well, since you have a lawyer on board who has advised you to call the deal off, I'm sure that he would have arrived at that decision having perused all the documents and correspondence between the parties. I do not have any documents to refer to in order to give you a proper advice.

Basically, if the buyer or buyer's lawyer failed to send over even a draft SPA within 14 days, then you have the right to call if off and forfeit the deposit. It's as simple as that. However, if in between there were some correspondence between the parties, like a request for further documents from your part, then the time granted to the buyer to prepare the SPA would be extended. So it depends on how parties were corresponding. In this regard, your lawyer ought to know better.

If you're on the right side, don't be afraid of all these shallow threats to sue. It's just to intimidate you to see if you'll get scared and refund to them the deposit.