Contracts and Purchase Agreements
This domain tests formation, performance, and remedies under North Carolina purchase contracts, especially the standard Offer to Purchase and Contract. Expect due diligence fee, earnest money, contingencies, and termination rights.
Core rules
- A contract requires offer, acceptance, consideration, capacity, lawful purpose, and a writing for land under the statute of frauds with essential terms and signature.
- The North Carolina Offer to Purchase and Contract separates the due diligence fee from earnest money. The due diligence fee is paid to the seller and is generally nonrefundable. Earnest money is held in trust and is applied to the price or refunded under the contract.
- The due diligence period lets the buyer inspect, obtain financing and appraisal, and terminate for any reason by timely written notice. Timely termination generally returns earnest money but not the due diligence fee.
- Disclosures include the Residential Property and Owners' Association Disclosure Statement and the Mineral and Oil and Gas Rights disclosure.
Worked example
Buyer pays a $1,500 due diligence fee and $2,000 earnest money. During the 21-day due diligence period, Buyer sends written termination. Seller must refund the $2,000 earnest money; Seller keeps the $1,500 due diligence fee. If Buyer terminates after the period without a contract right, earnest money may be paid to Seller as damages.
Traps that cost marks
Treating the due diligence fee as refundable; using oral notice to terminate; missing a contingency deadline; assuming the seller's disclosure replaces the buyer's inspection; and ignoring time-is-of-the-essence language that makes dates enforceable.