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Test Your Knowledge – Due Diligence Fee

by bgallagher on December 9, 2011

in Questions & Answers

Question:  According to the NCAR/NCBA Offer To Purchase and Contract, when does the seller receive the due diligence fee?

Answer:  It’s important to remember the due diligence fee is made payable to the seller.  The due diligence fee is not given to the seller to deposit until the effective date.  Agents can show the seller a copy of the due diligence fee check; however, the listing agent does not give the seller the check until the effective date.  Listing agents need to remind the seller to deposit the due diligence fee check immediately upon receipt of the check.  The buyer’s lender will usually want a copy of the cancelled due diligence fee check for loan approval.  If the seller has not deposited the due diligence fee check, the buyer’s loan could be delayed.  Most sellers deposit the check immediately; however, some sellers keep the check paper clipped to the contract and put it  in their files without depositing.  In summary, the due diligence fee is paid to the Seller by the effective date.  The due diligence fee “…shall be the property of Seller upon the Effective Date.” The “effective date” is the date that: (1) the last one of Buyer and Seller has signed or initialed this offer or the final counteroffer, if any, and (2) such signing or initialing is communicated to the party making the offer or counteroffer, as the case may be.

 

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