Major Changes to North Carolina Real Estate Contract
The NC real estate contract has changed dramatically for 2011. The new North Carolina real estate contract, called the Offer To Purchase And Contract, will require a totally different approach to the home buying process. Let’s take a look at the major changes to the NC real estate contract.
Due Diligence Period: The biggest change to the NC real estate contract is the addition of a due diligence period. This is a mutually agreed upon period of time that the buyer will have to fully investigate the property and decide whether to proceed. The length of time and the fee for the due diligence period are negotiable between the buyer and seller. The buyer purchases this period to fully contemplate the purchase of the property and may terminate the contract for any reason or no reason, and at their sole discretion, prior to the expiration of the period.
Due Diligence Fee: A negotiated fee will be paid to the seller by the buyer for the right to conduct due diligence. It would stand to reason that the longer period of time required by the buyer, the more the cost of the fee. The fee becomes the property of the seller and is a credit to the buyer upon closing.
It is important to note that this does not replace the earnest money deposit.
Due Diligence Process: During this period the buyer must complete any of the following items that are important to them and critical to completing the purchase.
– have all inspections performed
– secure final approval for any financing
– review all relevant property documents
– investigate insurance availability and affordability
– have the property appraised
– have the property surveyed
– investigate zoning, schools, proposed roads, etc
– investigate potential flood hazards and and flood insurance requirements
– any other investigation the buyer wishes to perform
Gone is the process of inspecting the property and then debating what is a necessary repair. The buyer is free to request that the seller make any repairs and improvements they wish without regard to whether the request is for an item on the previously used necessary repair list. Likewise, the seller is free to refuse to make any repairs or improvements. The buyer can accept the property in its as-is condition, negotiate a written agreement as to what will be repaired, or terminate the contract prior to the expiration of the due diligence period.
Note: There is no longer a finance or appraisal contingency. These matters must be resolved prior to the expiration of the due diligence period.
Simplified Dates: Eight dates have been reduced to only three. The new NC real estate contract contains 1) effective date 2) due diligence date 3) settlement date.
Seller Breach Provision: In the event that a seller breaches the contract, or materially fails to comply with their obligations to deliver the property at settlement, both the due diligence fee and the earnest money deposit are returned to the buyer. The seller is also now obligated to reimburse the buyer for reasonable costs actually incurred during the due diligence period.
There are other changes as well, however, this pretty much covers the major differences between the previous contract and the new one.