In last week’s Class Notes newsletter I asked a pop quiz question: in North Carolina, if a buyer backs out during due diligence, do they get their due diligence fee back? The answer is almost always no. Here’s why the NC due diligence fee works that way, and how it fits with the due diligence period and earnest money.
Two deposits, two jobs
An NC home purchase using the standard Offer to Purchase and Contract (Form 2-T) usually involves two separate payments from the buyer:
- The due diligence fee goes directly to the seller. It compensates the seller for taking the home off the market while the buyer investigates it.
- The earnest money deposit sits with an escrow agent named in the contract. It shows the buyer’s good faith and counts toward the buyer’s costs at closing.
If the sale closes, the buyer gets credit for both. The difference shows up when it doesn’t. For the bigger budget picture, see how much house you can afford in Cary and why a 20% down payment avoids PMI.
The due diligence period
The due diligence period is the window the buyer and seller negotiate for inspections, the appraisal, the loan, insurance, surveys and anything else the buyer wants to check. During that period, the buyer can terminate for any reason or no reason by giving written notice.
If the buyer terminates properly before the period ends, the buyer generally gets the earnest money back. The due diligence fee is not.
When is the NC due diligence fee refunded?
Rarely. The NC Real Estate Commission’s bulletin Due Diligence Fees: When Are They Refunded? describes the fee as nonrefundable except in narrow situations, such as:
- the seller materially breaching the contract,
- the home being destroyed or materially damaged before closing, or
- an addendum that specifically provides for a refund.
Whether a breach is “material” is a legal question, so a buyer in that situation should talk to a real estate attorney.
What changed for the NC due diligence fee on July 1, 2026
NC REALTORS revised Form 2-T effective July 1, 2026 (summary of the 2026 changes). The due diligence fee is still due on the Effective Date, but a buyer who hasn’t paid it that day is no longer in breach the next morning. The buyer has until the end of the next banking day. If the fee still isn’t paid, the seller must send written notice (Form 355-T) before terminating, and the buyer then has one more banking day to pay. The revised form also defines “banking day.”
How buyers should think about the NC due diligence fee
- Treat the due diligence fee as money you could lose, and size it to how sure you are.
- Negotiate the fee and the length of the period together. A longer period protects you; a larger fee makes your offer stronger.
- Schedule inspections early in the period, so you have time to negotiate repairs or walk away.
If you’ll need to sell your current home to buy, read how to sell and buy at the same time in NC before you pick a due diligence fee.
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Every Friday, my free Class Notes newsletter teaches one real estate lesson in about 60 seconds, plus a pop quiz. Join Class Notes here. Thinking of selling? Get my free broker’s opinion of value.
General information, not legal advice. Mike Hall, The Triangle Real Estate Professor, is a broker with First Flight Realty in Cary, NC, and an NCREC-approved real estate instructor.
