Escrow & TitleIntermediateNorth Carolina Exam

In a NC transaction, the 'earnest money deposit' vs. the 'due diligence fee' — which is refundable if the buyer terminates during due diligence?

ASimply that both the earnest money deposit and the due diligence fee are refundable, when in fact only one actually is under North Carolina practice

BThe earnest money is refundable; the due diligence fee is notCorrect

CThe due diligence fee is refundable; the earnest money is not

DNeither is refundable

Why The earnest money is refundable; the due diligence fee is not Is Correct

Answer B: The earnest money is refundable; the due diligence fee is not

Under the NC Offer to Purchase, if the buyer terminates during the due diligence period, the earnest money is refunded but the due diligence fee is retained by the seller.

Exam Tip: Escrow & Title

Escrow questions test the neutral third-party role and the sequence of closing events. Remember that the escrow agent acts as a dual agent for both buyer and seller and cannot advocate for either side.