respective claims, you may sue the other party in
the appropriate court to resolve them. With regard
to any earnest money you may have paid, the real
estate agent must retain it in an escrow account
until you and the seller reach a written agreement
for its disbursement or a court resolves the dispute.
Alternatively, with proper notification to you and
the seller, the agent may remit it to the clerk of court
in the county where the property is located. When
attorneys hold earnest money, they must hold or
dispose of it in accordance with the rules of the
North Carolina State Bar.
Q: The seller has accepted my offer but the
resulting contract requires that certain things
(loan approval, inspections) be done by a
certain date. What happens if they are not
completed by this date?
A: Generally, these “conditions" and
“contingencies” must be performed by the dates
specified in the contract or very soon thereafter,
depending upon whether the contract states that
“time is of the essence.” If time is of the essence,
and you or the seller fail to perform by the stated
deadline, the other patty' may terminate the contract.
If the contract does not state that “time is of the
essence”and, through no fault of your own, you are
unable to complete the inspections by the deadline,
but do so within a reasonable time, the seller must
still go forward with the transaction. Although the
seller may be able to recover damages from you for
your failure to perform by the stated date, the seller
must still perfonn his or her obligations under the
contract.
Q: Once I have entered into a contract with the
seller, is there any way I can cancel it’
A: Not without the consent of the seller unless a
particular law or special (non-standard) provision
in your contract grants you a right of rescission. For
example, the law grants a rescission right in the
following limited circumstances:
• Residential Property Disclosure Act At or
before the time you make your offer in a residential
transaction, the seller (whether or not a real estate
agent is involved) must provide you a written form
disclosing certain conditions and characteristics of the
property. If the seller does not, any resulting contract
is subject to a limited right of rescission — usually up
to three calendar days from the time the contract is
formed. You should lie aware, however, that there
are a number of exceptions to this requirement.
Consequently, for application of this law to a
particular situation, you should consult your attorney.
• Lead Paint Disclosure. If you are purchasing
a residential building constructed before 1978, federal
law requires sellers and their agents to provide you
written information about the possible presence of lead
paint and the associated hazards. If you are not given
this information (and an inspection period) before
entering into the purchase contract and have not
signed a written waiver of your rights, you have a ten
day inspection period during which you may be able
to cancel the contract.
• Condominiums. If you are purchasing a
new condominium from a person classified by law
as a developer, you have seven days to rescind your
purchase contract. When the seven day period begins
or ends can vary from one transaction to another, but it
usually begins when you are given the required public
offering statement. During this period, all monies
paid by you must be held in escrow by the developer.
Immediately contact an attorney for advice if you have
questions about your rescission rights. (For more
information on condominiums, see the Commission's
brochure, “Questions and Answers on: Condominiums
and Townhouses.”)
• Timeshares. If you are purchasing a new
timeshare in North Carolina from a seller classified by
law as a devebperofa timeshare project you have five
days to cancel your purchase contract which you can
do by mail. If you are a resident of another state, you
may also have additional rescission rights under the
laws of your home state. The developer must hold
all funds received from you in an escrow account
for at least ten days. However, if you are purchasing
the timeshare from another consumer or through
a foreclosure sale, there is no rescission period or
mandatory escrow of payments.
Q: Are there ways to purchase real estate other
than using the standard offer to purchase and
contract?
A: Yes. Here are a few:
• Option to Pmxhase. With an option to
purchase, you have the right during the option period
to buy property at an agreed upon price. For this
right, you will pay option money to compensate the
seller for taking the property off the market during
the option period. Although subject to negotiation,
option money is non-refundable and paid directly to
the seller at the signing of the option. Depending
upon the terms of the option agreement, you may or
may not receive credit for some or all of your option
money against the purchase price if you “exercise”
your option. The standard “Offer to Purchase and
Contract” form allows the buyer to pay an “Option
Fee" in exchange for the right to terminate the contract
for “any reason or no reason.” You should read any
option contract carefully and consult your attorney if
you have any questions.
• Lease with Option When a lease is coupled
with an option to purchase, you have the right to
buy property at a set price while leasing it. There
are no standard forms available for this purpose.
Attempting to modify other standard forms for such
use may result in a muddled or even unenforceable
contract, and constitutes the unauthorized practice
of law when performed by real estate agents. Since
these transactions may be riskier than a conventional
purchase, you should consult your attorney before into
entering such agreements.
• Lease-Purchase. In lease-purchase
transactions, you occupy property as a tenant but agree
to purchase it at a future date. There is no standard
lease-purchase form available, so you are again advised
to consult your attorney.
• Installment Land Sale. In an installment land
sale (also known as a contract for deed), title remains
with the seller while you make payments to the seller.
Usually, the contract allows you to possess and use
the property while making payments but such terms
are not legally required. If you are in possession of
the property and default on your payments, the seller
can sue you to regain possession of it and is generally
entitled to retain all the money you paid under the
contract.
The North Carolina Real Estate Commission
P.O. Box 17100
Raleigh, North Carolina 27619-7100
919/875-3700
Web Site: www.ncrec.state.nc.us
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