Previously, we talked about a Contingent Contract.
A Contingent Contract is the initial phase of a Contract when it’s first signed. The Contingency is typically based upon the Due Diligence period. You can find the blog here under Contingent Contract.
A Contract moves to a Pending State once the Contingency has been lifted. In this instance, once the Due Diligence period has expired, then the Contract goes “Pending” in preparation for the Closing. A Buyer would be considered in breach of Contract if they were to cancel during this Pending state of a Contract. Once in the Pending State, the Seller has very good assurances that the Contract will now move to Closing. This is the period the Seller has been waiting for. Recall during the Due Diligence period, the Buyer is able to cancel the Contract for “Any Reason or No Reason”. Now, as of 5pm on the last day of the Due Diligence period, the Buyer’s diligence has been fully completed and everyone is making preparations for a successful Closing. (Yay!)
If the Buyer were to cancel during a Pending period of the Contract, then the Buyer will also be forfeiting their Earnest Money. This is why the amount of the Earnest Money is usually significant such that a Buyer would think twice before simply “walking” during this phase. The actual verbiage which discusses this can be found in Paragraph 1(e) of NC Form 2-T, OFFER TO PURCHASE AND CONTRACT.
During the Pending State, Sellers will be finalizing the details of their move, eagerly packing, canceling any utilities including electric, gas/propane, trash pickup, newspapers, water, cable and/or satellite. Also the Seller should have notified the Post Office as to an address change.
The Buyers are also eagerly: packing, getting their utilities setup, notifying the Post Office, and working with their lender and attorney ensuring everything is in order.
Buyer and Selling a home is both exciting and nerve-racking, and usually quite stressful! It’s always good to have an experienced and trusted advocate on your team. If I can be of any assistance with your Buying and Selling experience, please don’t hesitate to contact me!
Regards,
Steve Doyle