We have a family who bought our home contract for deed with a 10% down payment. They are $900.00--for 3 months in the rear on payments, although they paid partial of what is due each month I find them in default. If they do not cure the contract in 2 weeks and pay what is due, we are sending a termination of the contract and telling them they are in default.
My question is, do we keep the down payment they gave us up front?

Generally yes. I guess it would depend on how you wrote the contract. We are purchasing on a contract for deed and it says that if we default that the down payment and any payments will be retained by the sellers as reasonable rent during the occupied time.

But even if it isn't in contract, I'd assume you would. If you don't make your mortgage payments and bank forecloses you don't get down payment back. If you finance anything and default, you don't get down payment back. Not sure that this would be any different.

What does your contract say about it, your contract should say specificly what a default is, what penalty there is, when and what cancells the contracta and what happens to the money,

The money is not a deposit and if they fail to buy the home, normally it is yours to keep.