3.1 North Carolina Offer to Purchase and Contract

The Standard Form 2-T

The Offer to Purchase and Contract (Standard Form 2-T) is the contract you will see most on the North Carolina exam. It is jointly published by NC REALTORS and the North Carolina Bar Association, which is why brokers may fill in the blanks but may not draft custom contract language (that is the unauthorized practice of law). North Carolina abandoned the traditional inspection-contingency model in 2011 and replaced it with the due diligence system below.

A valid NC real estate contract still needs the standard elements: competent parties (age 18+ and mentally competent), mutual offer and acceptance, lawful purpose, consideration, and a writing that satisfies the Statute of Frauds (G.S. 22-2). Because real property cannot be conveyed orally, every purchase contract must be in writing and identify the property.

The Two-Payment Structure (Exam Favorite)

NC uniquely splits the buyer's up-front money into two distinct payments. Confusing them is the most common Form 2-T error tested.

The due diligence fee compensates the seller for taking the home off the market while the buyer investigates. It is paid directly to the seller and is non-refundable even if the deal collapses during due diligence. The earnest money deposit (EMD) is a good-faith deposit held in a broker or attorney trust account. Both amounts are negotiable and either can be zero, though a $0 due diligence fee gives the seller little protection.

The Due Diligence Period

The Due Diligence Period is a defined window ending at 5:00 PM on the agreed-upon due diligence date. During it, the buyer can do anything: order a home inspection, test for radon, review HOA documents and budgets, verify financing and appraisal, run a survey, examine title, and check zoning. The defining rule is that the buyer may terminate for any reason or no reason before the deadline.

What happens when a buyer terminates

Worked example. Buyer pays a $1,000 due diligence fee and $5,000 earnest money. An inspection reveals foundation cracks. The buyer terminates in writing at 4:00 PM on the due diligence date. Result: the buyer recovers the $5,000 earnest money but the seller keeps the $1,000 due diligence fee. If instead the buyer simply fails to close two days after the DD date with no valid reason, the seller may keep all $6,000.

Other Key Dates and Clauses

• Effective date = the date the last party communicates acceptance; deadlines count from here.
• Settlement Date = the day funds and documents are exchanged; closing = the moment the deed is recorded. Form 2-T allows up to a 14-day delay in settlement by either party without being in breach if delay is due to circumstances beyond their control.
• Time is of the essence applies to the due diligence deadline and the settlement-delay clauses specifically, not to every date by default.

Common traps

• Calling the due diligence fee "refundable" — it is not, except by seller breach.
• Assuming earnest money must be a percentage of price — it is fully negotiable.
• Confusing settlement with closing — possession may transfer at a different time per the contract.

Financing, Appraisal, and Negotiating the Deadline

Unlike the old contingency model, Form 2-T does not contain a stand-alone financing contingency or appraisal contingency that survives the due diligence period. Instead, the buyer must confirm loan approval and appraisal value during due diligence. If financing or the appraisal falls short, the buyer's remedy is to terminate during due diligence and recover the earnest money — there is no separate loan contingency to fall back on afterward. This shifts more risk to the buyer and is exactly why the length of the due diligence period is heavily negotiated.

How the period is negotiated

Extending the Due Diligence Period

The parties may agree in writing to extend the due diligence date, usually using the Due Diligence Request and Agreement (Form 310-T) when the buyer asks the seller to make repairs, or a simple amendment. Repairs are not automatically required — the seller is never obligated to make repairs under Form 2-T. The buyer's leverage is the threat to terminate, and any repair agreement must be in writing to be enforceable under the Statute of Frauds.

Earnest Money Refund Scenarios (Summary)

Procedure trap. After a contract terminates, a broker holding earnest money cannot simply hand it to one party. If there is any dispute, the broker must hold the funds and use the statutory release/interpleader process — covered in Section 3.3.