ContractsIntermediateNorth Carolina Exam

In North Carolina, the 'due diligence fee' paid at contract execution is:

ARefundable if the buyer terminates during the due diligence period
BNon-refundable and paid directly to the sellerCorrect
CHeld in trust by the listing broker
DApplied only to closing costs, not purchase price

Why Non-refundable and paid directly to the seller Is Correct

Answer B: Non-refundable and paid directly to the seller

Under the NC Offer to Purchase, the due diligence fee is non-refundable (unless seller defaults) and is paid directly to the seller as compensation for the due diligence period.

Exam Tip: Contracts

Contract questions frequently test the essential elements required for a valid contract. Remember: competent parties, mutual consent, lawful object, and sufficient consideration. Watch for void vs. voidable distinctions.

Key Contracts Terms in This Question

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