The Blueprint of the Deal
The NC Offer to Purchase and Contract (Standard Form 2-T) is the single most important document a residential broker uses. It is the binding legal contract that defines the rights and obligations of the buyer and seller. What are the key terms in the Form 2-T that every Provisional Broker must master to ensure compliance and protect their clients?
Failure to understand these terms can lead to significant liability for the client and for the supervising Broker-in-Charge (BIC).
The 5 Non-Negotiable Contract Terms in Form 2-T
- Due Diligence Fee (DDF):
- What it is: A non-refundable, negotiated fee paid by the buyer directly to the seller upon contract formation. This fee is credited to the buyer at closing.
- Why it Matters: The DDF is the consideration paid for the Due Diligence Period and is immediately non-refundable if the buyer terminates the contract for any reason.
- Due Diligence Period (DDP):
- What it is: A negotiated period of time (days or weeks) granted to the buyer to conduct all inspections, appraisals, financing reviews, and research they deem necessary.
- Why it Matters: This period is the buyer’s protection. The buyer has the unrestricted right to terminate the contract for any reason during the DDP and receive the Earnest Money Deposit (EMD) back (but not the DDF).
- Earnest Money Deposit (EMD):
- What it is: A negotiated deposit delivered to an escrow agent (usually the Listing Firm’s trust account). This is often paid upon contract formation.
- Why it Matters: The EMD secures the contract. If the buyer terminates after the DDP expires (and is not otherwise protected), the EMD is forfeited to the seller.
- Settlement Date:
- What it is: The date the parties agree to complete the closing process, often occurring 30-45 days after contract acceptance.
- Why it Matters: All contractual deadlines—especially the DDP—are calculated from the effective date of the contract, all leading toward the Settlement Date.
- Prorations:
- What it is: The method of calculating and allocating the seller’s and buyer’s shares of expenses (like property taxes and HOA dues) for the year, based on the closing date.
- Why it Matters: Required to finalize the Closing Disclosure and ensure accurate financial settlement.
PB Note: A Provisional Broker must receive hands-on training from their Broker-in-Charge to master these terms, as improper explanation or calculation can lead to a client lawsuit.
Key Takeaway
Mastering the NC Offer to Purchase and Contract (Form 2-T) is mandatory for NC Provisional Brokers. The most critical terms are the Due Diligence Fee (DDF), the non-refundable consideration for the Due Diligence Period (DDP), and the Earnest Money Deposit (EMD), which determine the client’s financial risk upon termination.