SCR310 Residential Contract can operate without a financing contingency if the buyer has cash or uses the due diligence addendum.

SCR310 Section 7 Financing Contingency requires the buyer to make a good faith effort to get their purchase money loan but does allow the buyer to terminate up to closing if the lender does not approve the loan.

Some sellers may not want the financing contingency that runs to closing with a buyer who needs to get a loan. If so, the parties can negotiate a SCR310 residential contract and attach a SCR311 due diligence addendum with a due diligence period that is long enough to get the loan approval needed (this is how the NC due diligence contract operates) and a due diligence termination fee that the seller desires to receive if the buyer terminates. This creates a sunsetting due diligence period for financing.

The due diligence termination fee can replace the parties arguing over the earnest money.

If earnest money is due after the due diligence period, the parties could possibly sidestep the earnest money dispute because if the deal closes there is no earnest money dispute but if the deal terminates under due diligence then the seller gets the due diligence termination fee and the earnest money never becomes payable.

Posted by : Byron King on 10/23/18 (This information is only accurate as of 10/23/18. You must contact SCR for updates and changes to this information after 10/23/18 as laws and regulations may change over time. SCR 803-772-5206 or email info at screaltors.org)