Due Diligence Fee

A due diligence fee is a negotiated payment in the North Carolina standard purchase contract that the buyer pays directly to the seller for the right to cancel for any reason during the due diligence period. It is separate from the earnest money deposit.

Under the North Carolina form, the fee becomes the seller's property on the effective date and is credited to the buyer at closing. It is generally not refunded, even if an inspection turns up problems. Narrow exceptions apply, such as a material breach by the seller.

Earnest money works differently there. It goes to an escrow agent, and a buyer who terminates before the due diligence period ends normally gets it back. On a $500,000 North Carolina home, a buyer might pay a due diligence fee to the seller and also deposit earnest money in escrow. The fee is not required, and practice outside North Carolina differs.