these transactions may be riskier than a conventional
purchase, you should consult your attorney before into
entering such agreements.
• Lease-Purchase. In lease-purchase
transactions, you occupy property as a tenant but agree
to purchase it at a future date. There is no standard
lease-purchase form available, so you are again advised
to consult your attorney.
• Installment Land Sale. In an installment land
sale (also known as a contract for deed), title remains
with the seller while you make payments to the seller.
Usually, the contract allows you to possess and use the
property while making payments but such terms are not
legally required. If you are in possession of the property
and default on your payments, the seller can sue you to
regain possession of it and is generally entitled to retain
all the money you paid under the contract.
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THE NORTH CAROLINA
REAL ESTATE COMMISSION
P.O. Box 17100
•
Raleigh, NC 27619-7100
Phone: 919/875-3700
•
Website: www.ncrec.gov
7,500 copies of this public document were printed at a cost of $0.00 per copy.
REC 3.17 8/1/19
diligence period expires, the earnest money should
be refunded to you. If you terminate after the due
diligence period, the earnest money is usually
forfeited to the seller unless the seller is unable
or unwilling to satisfy the terms of the contract. If
there is any dispute between you and the seller
and you cannot agree to a resolution of your
respective claims, you may sue the other party in
the appropriate court to resolve them. With regard
to any earnest money you may have paid, the real
estate broker (or attorney escrow agent if using the
standard contract form) must retain it in an escrow
account until you and the seller reach a written
agreement for its disbursement or a court resolves
the dispute. Alternatively, with proper notification
to you and the seller, the broker or attorney escrow
agent may remit it to the clerk of court in the county
where the property is located. When attorneys
hold earnest money in a transaction not using the
standard contract form, they must hold or dispose of
it in accordance with the rules of the North Carolina
State Bar.
Q: The seller has accepted my offer but the
resulting contract requires that certain things
(loan approval, inspections) be done by a
certain date. What happens if they are not
completed by this date?
A: Generally, these “conditions” and
are a number of exceptions to this requirement.
Consequently, for application of this law to a particular
situation, you should consult your attorney.
• Lead Paint Disclosure. If you are
purchasing a residential building constructed before
1978, federal law requires sellers and their brokers to
provide you written information about the possible
presence of lead paint and the associated hazards. If
you are not given this information (and an inspection
period) before entering into the purchase contract and
have not signed a written waiver of your rights, you
have a ten day inspection period during which you
may be able to cancel the contract.
• Condominiums. If you are purchasing a
new condominium from a person classified by law
as a developer, you have seven days to rescind your
purchase contract. When the seven day period begins
or ends can vary from one transaction to another, but it
usually begins when you are given the required public
offering statement. During this period, all monies
paid by you must be held in escrow by the developer.
Immediately contact an attorney for advice if you have
questions about your rescission rights. (For more
information on condominiums, see the Commission’s
brochure, “Questions and Answers on: Condominiums
and Townhouses.”)
• Timeshares. If you are purchasing a new
“contingencies” must be performed by the dates
specified in the contract or very soon thereafter,
depending upon whether the contract states that
“time is of the essence.” If time is of the essence, and
you or the seller fail to perform by the stated deadline,
the other party may terminate the contract. If the
contract does not state that “time is of the essence”
and, through no fault of your own, you are unable
to complete the inspections by the deadline, but do
so within a reasonable time, the seller must still go
forward with the transaction. Although the seller may
be able to recover damages from you for your failure
to perform by the stated date, the seller must still
perform his or her obligations under the contract.
Q: Once I have entered into a contract with the
seller, is there any way I can cancel it?
A: The standard form contract allows the buyer a
“due diligence period” in order to perform inspections
and obtain a loan. As a buyer, you have the right to
terminate for any or no reason prior to the expiration
of the due diligence period. After the expiration of the
due diligence period, your right to terminate is limited
to any special provision provided in the contract. The
law grants a special rescission right in the following
limited circumstances:
• Residential Property Disclosure Act. At
or before the time you make your offer in a residential
transaction, the seller (whether or not a real estate
broker is involved) must provide you with two written
disclosures: (1) Residential Property and Owners’
Association Disclosure Statement, and (2) Mineral and
Oil and Gas Rights Mandatory Disclosure Statement.
If the seller does not, any resulting contract is
subject to a limited right of rescission — usually up
to three calendar days from the time the contract is
formed. You should be aware, however, that there
timeshare in North Carolina from a seller classified by
law as a developer of a timeshare project, you have five
days to cancel your purchase contract which you can do
by mail. If you are a resident of another state, you may
also have additional rescission rights under the laws of
your home state. The developer must hold all funds
received from you in an escrow account for at least ten
days. However, if you are purchasing the timeshare
from another consumer or through a foreclosure sale,
there is no rescission period or mandatory escrow of
payments.
Q: Are there ways to purchase real estate other
than using the standard offer to purchase and
contract?
A: Yes. Here are a few:
• Option to Purchase. With an option to
purchase, you have the option to buy property at an
agreed upon price during an agreed period of time. For
this right, you will pay option money to compensate the
seller for taking the property off the market during the
option period. Although subject to negotiation, option
money is non-refundable and paid directly to the seller
at the signing of the option. Depending upon the terms
of the option agreement, you may or may not receive
credit for some or all of your option money against
the purchase price if you “exercise” your option. You
should read any option contract carefully and consult
your attorney if you have any questions.
• Lease with Option. When a lease is coupled
with an option to purchase, you have the right to
buy property at a set price while leasing it. There
are no standard forms available for this purpose.
Attempting to modify other standard forms for such
use may result in a muddled or even unenforceable
contract, and constitutes the unauthorized practice
of law when performed by real estate brokers. Since
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Questions and Answers on:
OFFER AND
ACCEPTANCE
Questions and Answers on:
OFFER AND
ACCEPTANCE
A publication of the North Carolina Real Estate Commission
it before you enter into a binding contract.
The questions raised in this publication
are of special concern to real estate purchasers.
Consequently, they are posed from the standpoint of
the purchaser.
Q: I have found a home I am interested in
buying. How do I make an offer to purchase it?
A: Typically, you will complete a standardized offer
to purchase form with the help of a real estate broker
— probably a buyer agent. This form will express the
terms of the purchase (purchase price, closing date,
etc.) that you are proposing to the seller. The most
common residential offer form in North Carolina is
the “Offer to Purchase and Contract” (Form No. 2-T),
jointly approved by the N.C. Bar Association and
NC REALTORS
®
. Many standard “addenda” forms
also are available to add provisions of special
importance to the parties. Your real estate broker
may have a variety of these forms, but if a standard,
preprinted form is not available covering the specific
terms of your offer, you should consult a private
attorney to draft an appropriate document for
your use. Real estate brokers are not permitted to
draft contracts or even special provisions such as
contingencies.
Q: Does my offer to purchase have to be in
writing?
A: To be enforceable, real estate sales contracts in
North Carolina must be in writing. Since only written
offers may become binding contracts, your offer
should be in writing and signed.
Q: What should be in my offer?
A: At a minimum, your offer must clearly identify you
and the seller, and state the sales price, and closing date
Questions and Answers on:
O F F E R A N D A C C E P T A N C E
The purchase contract is the most important
document in any real estate sale. It must reflect the
entire agreement between the buyer and seller. This
brochure examines issues arising during contract
negotiations in residential real estate sales transactions.
In particular, it focuses on “offer” and “acceptance”:
the process by which a buyer and seller create a
binding legal contract. This process typically begins
when a prospective buyer makes an offer. Then, the
seller either accepts it, rejects it, or rejects it and makes
a counteroffer. Then the buyer has the same options
(i.e., accept, reject without making a counteroffer, or
reject with a counteroffer). When one party accepts
the other party’s offer or counteroffer, including
communicating that acceptance to the offering party, a
purchase contract is created.
Any misunderstandings concerning offer and
acceptance can result in serious legal and financial
consequences for the buyer and seller. Therefore, it
is imperative that you carefully read and understand
the entire purchase contract and that you consult an
attorney if you do not understand any issues regarding
and all of the terms agreed upon by you and the seller.
It must also contain an adequate legal description of the
property (for example, a reference to a recorded plat
map or deed) — a street address alone is not sufficient.
There are many other important provisions you should
consider. For example, to ensure that items or features
of the property you have seen in advertisements
or MLS information are included in the sale, you or
your broker should list them in your offer. Any form
contract supplied to you by a real estate broker must
include at least nineteen separate required provisions.
The standard form “Offer to Purchase and Contract”
includes all these and many more.
Q: Must my offer include earnest money?
A: Earnest money is not required to make a binding
real estate sales contract. However, it is a common
practice for a buyer to include it with an offer because
it shows the buyer’s good faith, demonstrates some
available cash, and makes it more likely that the seller
will accept the offer. Real estate brokers must deposit
earnest money checks no later than three banking days
after acceptance of the offer, but they may be deposited
earlier at any time after receipt. So, be sure your
earnest money check is good at the time you write it.
(For more information on earnest money deposits, see
the Commission’s brochure, “Questions and Answers
on: Earnest Money Deposits.”)
Q: How will my offer be communicated to
the seller?
A: The real estate broker with whom you are working
must deliver it to the seller’s broker or directly to the
seller if the seller has no broker. The seller’s broker
must present it to the seller.
Q: How does acceptance occur?
A: To accept your offer, the seller must sign it without
making any changes. Until you or your broker have been
notified that the seller has signed your offer, you can
withdraw it at any time — even if you have given the
seller a deadline by which he or she must respond.
Q: Once the seller has signed my offer, does it
become a contract?
A: No. It does not become a binding contract until
the seller (or seller’s broker) has notified you (or your
broker) that the seller has signed it. If your broker
informs you that the seller has “verbally” accepted or
will accept your offer but has not yet signed it, there is
no enforceable contract.
Q: How will I be notified of the seller’s
acceptance of my offer?
A: Unless the contract specifies the manner in which
acceptance is to be given, it may be communicated in a
— even if your offer was submitted first and is for a
higher purchase price. A broker is required to deliver
all offers promptly. In order to obtain for their seller-
clients the best possible bargain, the seller’s broker
will usually inform competing prospective buyers that
other potential buyers are interested in the property.
To treat competing prospective buyers fairly, the
seller’s broker may not divulge the price and terms of
competing offers without the express authority of the
offering party. Whether you have been informed of
competing offers or not, you should not assume that
your offer will receive special consideration or that you
are the only buyer who is interested in the property.
Q: What else might happen to my offer after I
submit it to the seller?
A: It may simply expire if you include an expiration
date in the offer (or within a reasonable period of
time if no deadline is set). It is terminated if the seller
sells or contracts to sell the property to someone else.
Otherwise, unless you withdraw it, the offer remains
an offer.
Q: What happens if the sales transaction does
not close?
A: If you terminate the contract before the due
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variety of ways including orally by the seller or seller’s
broker, by personal delivery of the signed offer, mail,
facsimile (fax) or electronic mail. If you’re told that the
seller has accepted your offer, ask whether the seller has
signed it, and ask for a signed copy of the contract. Your
real estate broker must furnish it to you.
Q: What if the seller changes my offer in some
way and then signs it?
A: If the seller makes any changes in your original offer,
the offer is rejected and cannot later be accepted. By
making changes to the original offer, the seller is, in
fact, making a counteroffer to you which you can either
accept, reject without making a counteroffer, or reject
and make your own counteroffer. The process can
continue in this manner indefinitely. You and the seller
should initial and date all changes made during the
negotiation of an offer. If the offer becomes too “messy”
as a result of many changes, re-type the offer in its final
form before signing it.
Q: What happens if someone else makes an
offer to purchase the property before the seller
accepts my offer?
A: Until the seller signs your offer and notifies you
or your broker that it has been signed, the seller can
consider and accept an offer from a competing buyer
Continued
