Q. In your previous response to my question, you mentioned Earnest Money. What is Earnest Money? Is it required? Is it non-refundable like Due Diligence Money?
A. For residential real estate sales in North Carolina and South Carolina, Earnest money is a refundable deposit, typically collected at the time of Contract, that is credited back to the Buyer at closing. In the event that the Buyer defaults on the purchase of the home and it is a breach of the Contract, the Seller can claim the Earnest Money Deposit for damages.
In North Caorlina, Earnest Money is fully refundable so long as the Buyer terminates the Contract during the Due Diligence Period. After the Due Diligence Period has expired, the Earnest Money becomes “hard” or non-refundable.
In South Carolina, Earnest Money is refundable so long as the Buyer terminates the Contract before completing milesone date (property inspection, financing contingency, etc).
In either state, the Earnest Money should be refunded in any situation where there is a material breach of the Contract by the Seller.