NC Home Buyers and Sellers to Face Major Changes in the Real Estate Transaction Process

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A new NCAR Offer to Purchase and Contract went into effect in North Carolina on January 1, 2011. Designed to eliminate problems that have consistently occurred, the new contract is a “due diligence” style contract, similar to those used in commercial real estate for years.

A new NCAR Offer to Purchase and Contract went into effect in North Carolina on January 1, 2011. Designed to eliminate problems that have consistently occurred, the new contract is a “due diligence” style contract, similar to those used in commercial real estate for years.

“These upcoming changes have definite advantages for both buyers and sellers. We are working with Realtors® across the state to ensure that they’re ready when the new laws go into effect,” says Bill Gallagher, owner and instructor of the Superior School of Real Estate.

This effort is a result of a five year project of the North Carolina Association of REALTORS® and the North Carolina Bar Association. The changes are detailed below:

Changes for the Buyer Include:

  • Buyers will be able to negotiation a due diligence period in which to investigate the property in order to determine whether or not they want to proceed to a closing.
  • During this due diligence period, the Buyer will be responsible for determining, but not limited to, the following types of information: loan qualification, inspections, insurance availability, surveys covenants, zoning and any other discoveries the Buyer needs to obtain to make an informed decision.
  • If a due diligence fee is negotiated and paid to the Seller, the amount is credited to the Buyer at closing.
  • The Buyer has the right, upon delivering written notice to the Seller prior to the end of the due diligence period, to cancel the contract for any reason whatsoever and have their earnest money returned; the due diligence fee is kept by the Seller.

Changes for the Seller Include:

  • Granting the Buyer a definite time period, the due diligence period, knowing that once the due diligence period has concluded, the Seller can reasonably be assured that the sale will close.
  • If the sale does not close, the Seller will be able to retain the earnest money in most cases.
  • There is no longer a list of repairs that the Seller must make in order to keep the contract valid. All repairs or alterations are negotiable.
  • Seller must be able to produce a clear title at closing. Failure to do so will result in the Seller not only returning the earnest money to the Buyer, but the due diligence fee, as well. The Seller will also be liable for all reasonable costs incurred by the Buyer, for their due diligence.

Other Key Changes Include:

  • Elimination of the Seller’s right to sue the Buyer for breach of contract. Recent court cases have cited the Seller’s retention of the earnest money and continued possession of the property as sufficient compensation. This factor most likely will cause an increase in earnest money deposits.
  • The market place will determine the amount of due diligence fees as well as the length of time the Seller agrees to grant the Buyer for a due diligence period.
  • There is a new definition in the contract for Closing. The tradition of meeting at the attorney’s office for the closing has been redefined as the Settlement date. Keys are to be passed and proceeds dispersed when the closing process is completed in accordance with a well defined set of guidelines.

About Superior School of Real Estate:
Superior School of Real Estate provides the tools, the resources and the connections essential to achieving success in the highly competitive real estate industry. Our programs are customized for students at every stage of their careers, whether earning their license, keeping up to date on the latest changes or learning how to give their existing business a boost. Beyond mandatory credits and credentials, we offer practical advice and proven strategies that have been instrumental in advancing the careers of thousands of licensees and Realtors® across North Carolina.

Our dedicated, dynamic team of professionals is led by Bill Gallagher. With more than 20 years of experience, there’s hardly a law, issue or definition he doesn’t know. We continue to expand the scope of our school by bringing together results-oriented team members who always put friendly, personal service on the agenda. Everyone here shares a passion for helping clients attain – and often exceed – their goals. For more information, go to: http://www.superiorschoolnc.com

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Steve Connell
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