Nogui's Blog

This post covers some of the critical deadlines and required items within the Offer to Purchase and Contract form used to buy residential property in North Carolina.

Offer to Purchase and Contract
The form is one of several that are typically submitted when an offer is made on a property. The form is jointly approved by both the North Carolina Bar Association and the North Carolina Association of Realtors®, Inc. It has 28 sections. Though all are important, some are critical to the transaction in terms of deadlines.

The form gives the buyer a certain amount of time to inspect, apply and get approved for financing, submit repair requests, etc.

Some of the items required when submitting an offer:
A pre approval or pre qualification letter from your lender stating that you are eligible to borrow the appropriate amount of money to purchase. If its a cash deal, proof of funds from your bank will be required. Another is "earnest money deposit". Earnest money shows you intend to purchase the home and will do your best to do so. This amount will be credited to you at closing and can be from 1 to 3 percent of the asking price. If one of the parties breaches the contract, then the injured party receives the earnest money as compensation. The escrow agent (typically the listing agent) must hold the funds until there is an agreement by both parties as to the release of the earnest money.

SECTION 1: Identify property and parties.
The offer will state the price offered, address and legal description of the property and any additional items that buyer may request, such as washer, dryer, refrigerator, etc. Some built-ins are typically considered "real" property, unless otherwise strictly stated by the seller. Chandeliers, playgrounds, etc. The seller should state which items convey with the property and which items DO NOT.

SECTION 5: Loan Conditions and Deadline
This section explains what type of loan the buyer is getting, at what terms and when the buyer will apply for the loan. The buyer agrees to notify the seller of loan application or else furnish proof if formally requested from the seller. The buyer then has 5 days to respond or else will be considered in breach of contract.

Buyer's Right to Terminate
If the buyer has applied for a loan and does not feel they will be approved, then the buyer has a mutually agreed certain amount of days to notify the seller. In this case, the contract is terminated, the buyer is refunded the earnest money. The buyer must "pursue qualification for and approval of the Loan diligently and in good faith" and "Continually provide the requested documentation to the lender"

SECTION 16: Property Inspection
In the Offer to Purchase, there are two alternatives in which the buyer has an opportunity to inspect the property.
Alternative 1. The buyer, at their expense, has a mutually agreed amount of time to hire a home and pest inspector, and request repairs or remediations from the seller. The seller can then agree, refuse completely, or agree to complete part of the repairs. As long as the seller agrees to complete all repairs, the contract is considered to be in force. If the seller does not agree to any repairs or remediations, the buyer has the choice to accept the property as is or can terminate the contract and is refunded the earnest money.

Alternative 2. The buyer pays a non refundable option fee directly to the seller and has a certain amount of days to complete inspections. After those days then the buyer has the opportunity to accept the property as is or for any reason at all can terminate the contract. The buyer can also request repairs at this point.

What if the property needs to much work?
The Cost of Repair Contingency states that in the event that the property has repairs in excess to a mutually agreed amount, then the buyer can terminate the contract and are refunded the earnest money. This is the case if even the seller were to agree to make all repairs.

TIME IS OF ESSENCE: This term appears throughout the contract after certain deadlines. This means that everything must be completed by certain dates or one of the parties is considered have waived a condition or could be in breach of contract.

These are a few of the important sections on the North Carolina Offer to Purchase and Contract. For more information about this form or any questions about buying and selling real estate, please contact me!