If a client puts an offer on a vacant building and the offer stipulated that he had 30 days to perform an inspection and that he could cancel the agreement within 30 days. On the 29th day, the client decided to cancel the agreement even though he had not inspected the premises. The client decided to purchase another building and didnt follow through on the inspection which he had an offer on. The seller, now wants to keep the deposit as the buyer didnt act in good faith. If the agreement says that the buyer can cancel the agreement for any reason and get a refund of his deposit, then can the seller claim lack of good faith to keep the deposit?

Sounds like the seller is desperate to sell. Thats why he is holding onto the deposit. I would threaten litigation and sue for attorney fees if he doesnt return the deposit to your client. Its that simple.

no, can't hold the deposit, there's no "good faith" claim. that's the point of a deposit, to reserve the opportunity to purchase in the future.

Sue for conversion