Delivery of Due Diligence Fee and Demand
QUESTION: An out-of-town buyer and my seller went under contract using the Offer to Purchase and Contract (Standard Form 2-T). The buyer allegedly mailed a certified check for the Due Diligence Fee to my firm’s office on the date the contract became effective. It has now been a week, and my seller still has not received the check. I called the buyer’s agent today, and I told him we will terminate the contract tomorrow if we do not receive the check. The buyer’s agent claimed that “delivery” occurred when the check was put in the mail, which means my seller cannot terminate. What should I do?
ANSWER: Delivery is described in paragraph 20 of Form 2-T, which provides that “any fee, deposit or other payment to be delivered to a party herein may be given to the party or to such party’s agent.” Since neither you nor your client have actually received the Due Diligence Fee check, the payment has not been delivered.
The buyer agent’s assertion that delivery was completed when the check was placed in the mail is mistaken. According to the NC Real Estate Commission’s North Carolina Real Estate Manual, “[t]he mailbox rule basically operates only as a method of communicating acceptance of an offer. It does not apply to any other situation.” The mailbox rule does not apply to delivery of the Due Diligence Fee, and therefore the payment is not considered delivered until it actually reaches your office.
Form 2-T outlines the seller’s recourse if the buyer fails to deliver the Due Diligence Fee by the Effective Date. While you have communicated your seller’s intent to terminate orally over the phone, it is essential to provide a written demand for the fee and give the buyer until the end of the next banking day to comply. You can use Standard Form 355-T for this purpose. If the buyer does not timely satisfy the seller’s written demand for payment, the seller will have the right to terminate the contract and pursue other remedies. You can read more here about the appropriate timing for a termination notice and the forms to use if the buyer fails to make timely payment.
Release Date: 02/06/2025
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