Termination Option

5 Replies

What states other than Texas has a termination option clause in the state promulgated contract? In other words what states have an option period as a standard part of the purchase process?

I'm not sure if this is exactly what you're looking for but North Carolina has a 'due diligence' period written into the standard "North Carolina 2-T Offer to Purchase and Contract" form.

The due diligence period is negotiable but is normally from 10-14 days (in our local market at least), during which the buyer may terminate the contract for any reason at all and receive their earnest money deposit back. 

There are two types of money that can be requested from the buyer though.  Earnest money deposit is refunded if the buyer terminates during the due diligence period.  Due diligence money is not returned to the buyer unless the contract is fulfilled.  In our local market though (Jacksonville NC) it is very rare that anyone puts up due diligence money.

Matthew, I recently had a flip in Jacksonville, NC where the agent collected $250 due diligence fee. The buyers financing fell through and when I received the termination agreement the other day I noticed it had me receiving  $125 and the agent receiving  $125. Is this typical? 

Thanks,

Jim Stallings

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@Jim Stallings That's interesting. Are you sure it was due diligence money and not earnest money? The DD check is usually written directly to the seller, so the agent shouldn't have been holding that anyway. The EMD is held by the broker, and they are entitled to half of that if the sale falls through.

This is in paragraph 11 of the listing agreement, EARNEST MONEY: "Any earnest money forfeited by reason of the buyer's default under a sales contract shall be divided equally between the Firm and Seller."