In North Carolina, the due diligence fee is due by the Effective Date of the contract, which is the moment the last party signs the Offer to Purchase and Contract (Form 2-T) and communicates that acceptance to the other side. The standard form requires the fee to be “made payable and delivered to Seller by the Effective Date,” so the payment needs to be ready before the offer goes in, not after the seller signs.1North Carolina Real Estate Commission. “Due Diligence” Questions and Answers
What the Effective Date Actually Is
The Effective Date is the single concept that controls your deadline. It occurs when the last party to sign communicates acceptance to the other side. If you submit an offer on Monday and the seller signs it Tuesday afternoon, with their agent emailing acceptance to your agent that same day, Tuesday is the Effective Date. Your fee is already due.1North Carolina Real Estate Commission. “Due Diligence” Questions and Answers
Form 2-T uses the word “by” the Effective Date, not “after.” There is no built-in grace period baked into the contract once it forms.2North Carolina Real Estate Commission. Due Diligence Fees: How and When Must They Be Delivered? In practice, that means your check or wire needs to be arranged before the seller signs, because you often won’t know in advance exactly when they will.
The Broker’s Three Business Day Window
If you hand your check to your broker to deliver on your behalf, NC Real Estate Commission Rule 58A .0116(b)(4) gives the broker a maximum of three business days after the contract is accepted to get that check into the seller’s hands. That window is a logistical allowance for the broker who is physically moving the payment. It is not extra time for you to come up with the money.2North Carolina Real Estate Commission. Due Diligence Fees: How and When Must They Be Delivered?
Your obligation is to deliver funds to the broker by the Effective Date. The broker’s obligation is to pass them along within three business days. Confusing the two is one of the easier ways to lose a deal.
How to Pay and Prove Delivery
The due diligence fee goes directly to the seller. This surprises many buyers, especially those used to purchase processes in other states. Unlike earnest money, the fee is not held in escrow. The seller can deposit it the day it arrives and spend it immediately.3North Carolina Real Estate Commission. Due Diligence Fees: When Are They Refunded?
Acceptable payment methods include personal checks, certified checks, cashier’s checks, and electronic wire transfers. If you pay by check, make it payable to the seller personally, not to a brokerage or escrow agent. Your broker can take custody of the check for the purpose of delivery, but cannot deposit it into a trust account. The money belongs to the seller.2North Carolina Real Estate Commission. Due Diligence Fees: How and When Must They Be Delivered?
When the seller or listing agent receives payment, have them sign the “Acknowledgment of Receipt of Monies” section at the end of Form 2-T. That signed acknowledgment is your proof that you met the deadline. For wire transfers, keep the bank confirmation showing date, amount, and recipient, and forward it to your agent and the listing agent so no one can dispute the timing later.1North Carolina Real Estate Commission. “Due Diligence” Questions and Answers
Wire Fraud Precautions
Because the fee goes directly to an individual rather than to a title company or escrow account, verifying wire instructions matters more here than in most transactions. Scammers monitor real estate deals and send fraudulent wiring instructions that look like they came from the listing agent or seller. If you receive instructions by email, confirm them by calling the listing agent at a number you obtained independently, not a number pulled from the email. Treat any last-minute change to an account number as suspicious. A five-minute call can prevent a loss you will never recover.
What Happens If You Miss the Deadline
Missing the Effective Date deadline does not automatically kill the deal, but it hands control to the seller. Under Paragraph 1(d) of Form 2-T, if you fail to deliver the fee by the Effective Date, the seller must send you written notice of the failure. You then have one banking day to deliver cash, an official bank check, a wire transfer, or an electronic transfer to the seller.4NC Realtors. Seller Rights When Buyer Fails to Deliver Due Diligence Fee
If you still don’t deliver within that one banking day cure period, the seller can terminate the contract with written notice. The deal is over. One banking day is not much time to arrange certified funds or a wire if you weren’t already prepared, which is why the payment method needs to be sorted out before you submit the offer, not after.
Don’t Confuse This Deadline with the Earnest Money Deadline
Buyers new to North Carolina often blur the due diligence fee with earnest money. They are different payments on different tracks.
- The due diligence fee goes directly to the seller. Earnest money is held in escrow, typically by the listing brokerage firm.
- The due diligence fee is due by the Effective Date. Earnest money has its own delivery timeline set out in the contract.
- If you terminate during the due diligence period, the seller keeps the due diligence fee but your earnest money is refunded.
- The due diligence fee is usually the smaller of the two. Earnest money is often around one percent of the purchase price, while the due diligence fee varies widely by market conditions and negotiation.
Both amounts are credited toward your purchase price at closing if the transaction closes successfully.5North Carolina Real Estate Commission. Earnest Money Brochure For the question of when the money is due, though, treat the two deadlines as separate obligations, and plan to meet the due diligence fee deadline first.