Home under contract? Is it “sold”?

Isn’t it usually exciting when a realtor announces to you… “we have a contract”? This may be the result of negotiating back and forth with a buyer, months or years of your property being on the market, price reductions from what you originally listed your property for sale, etc.. Unless you have a cash buyer not exercising a due diligence period, and maybe a couple other limited situations… you might want to hold off on announcing to your family, friends, co-workers, etc. that you have “sold” your home. Let me explain why.

You as the seller, and a buyer have agreed to a price and terms to sell your property. In North Carolina, the buyer may have implemented a due diligence period during the term of the contract. It used to be that there were contingencies to a sale, i.e. satisfactory inspections, buyer obtains financing, buyer sells their property, etc. Those contingencies are now summarily addressed in a due diligence period. During this due diligence period the buyer may terminate the contract for ANY, or NO REASON up until 5pm on the end of the due diligence period. WHOA….. put the brakes on… maybe your property isn’t technically sold when you went “under contract”. Generally, the buyer is also entitled to a refund of their earnest money deposit if they terminate the contract in writing before 5pm on the last day of the due diligence.

The due diligence period is an agreed to number of days for a buyer to conduct inspections, i.e. survey, septic, well, home inspection, radon, wood destroying pest organisms, water, for example. They may also be obtaining a loan to purchase the property during this time. Sometimes, it is necessary to extend the due diligence period if inspections and so on can’t be completed in the specified time frame (I often use 30 days). This can be related to the schedule of availability of vendors, i.e. home inspector, etc. If this occurs a buyer will ask the seller for an extension which is usually acceptable to the seller… you do want to sell don’t you?

If, and when the buyer is satisfied that their inspections have acceptable results, any negotiations have concluded related to repairs agreed to by the seller (if applicable), and no other factor determines that they want to terminate the contract… you are ready to proceed to settlement and closing.

An attorney in NC will also conduct a title search to ensure you/seller can legally transfer ownership of the property free of liens, encumberances, etc. This is another aspect of selling your property where there needs to be a positive outcome, or any issues found in a title search are satisfactorily resolved.

In summary, you may want to save your elation over “selling” your property until you have attended a settlement meeting (or settled via mail), and the deed has been recorded (closed) at the courthouse of the county where the property is located.  It may save you some heartache, and giving any explanations you may feel obligated to provide to others.

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