diligence period expires, the earnest money should
lie refunded to you. If you terminate after the due
diligence period, the earnest money is usually
forfeited to the seller unless the seller is unable
or unwilling to satisfy the terms of the contract If
there is any dispute between you and the seller
and you cannot agree to a resolution of your
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 broker (or attorney escrow agent if using the
standard contract form) 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 broker or attorney escrow
agent may remit it to the clerk of court in the county
w'here the property is located. When attorneys
hold earnest money in a transaction not using the
standard contract form, 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 lie performed by the dates
specified in the contract or very soon thereafter,
depending upon whether tire 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 party may terminate the contract. If the
contract does not state that “time is of the essence”
and, through no fault ofyour own, you are unable
to complete the inspectioas 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
perform 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: Tire standard form contract allows the buyer a
“due diligence period” in order to perform inspections
and obtain a loan. As a buyer, you have the right to
terminate for any or no reason prior to the expiration
of the due diligence peril xl. After the expiration of the
due diligence period, your right to terminate is limited
to any special provision provided in the contract. Tire
law grants a special 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
broker is involved) must provide you with two written
disclosures: (1) Residential Property and Owners’
Association Disclosure Statement, and (2) Mineral and
Oil and Gas Rights Mandatory Disclosure Statement.
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 be aware, however, that there
are a number of exceptions to this requirement.
Consequently; for application of this law to a particular
situation, you should coasult your attorney.
• Lead Paint Disclosure. If you are
purchasing a residential building constructed before
1978, federal law' requires sellers and their brokers 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 ofyour rights, you
have a ten day inspection period during which you
may lie 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 an vary' font 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
questii >ns about your rescission rights. (For mi >re
information on condominiums, see the Commission's
brochure, “Questions and Answers on: Condominiums
and Townhouses.”)
• Timeshares. Ifyou are purchasing a new
timeshare in North Carolina from a seller classified by
law' as a developer of a 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 law's of
your home state. The developer must hold all funds
received from you in an escrow account for at least ten
day's. 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 Purchase. With an option to
purchase, you have he option to buy property at an
agreed upon price during an agreed period of time. For
this right, you will pay option money to compensate the
seller for taking the property off he market during the
option period. Although subject to negotiation, option
money is non-refundable and paid directly to the seller
at the signing of he option. Depending upon the terms
of the option agreement, you may or may not receive
credit for some or all ofyour option money agaiust
the purchase price ifyou “exercise” your option. 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 his 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 brokers. 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 (aiso 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 an sue you to
regain possession of it and is generally entitled to retain
all he money you paid under the contract.
Scan the code below to access the
Commission Web site from pur mobile devices.
THE NORTH CAROLINA
REAL ESTATE COMMISSION
P.O. Box 17100 • Raleigh, NC 27619-7100
Phone:
919/875-3700
• Website: www.ncrec.gov
7, 5 00 copies of Ibis public document were printed a I a cost of $0.00 per copy.
REG 3.17
8/1/19
Questions and Answers on:
OFFER AND
ACCEPTANCE
A publication of the North Carolina Real Estate Commission
