🧠Real Agent Scenario: Loan Denial vs. Due Diligence Fee
Scenario:
Your buyer’s due diligence period ends today.
This morning, the lender notifies you the buyer’s loan was denied — the co-borrower’s work history didn’t meet underwriting requirements. The buyer now wants to terminate the contract.
The Agent Asks:
“Do I use both the Termination and Release forms, or just the Release?”
“Is the $200 termination fee still due since we’re on the last day of Due Diligence?”
Broker Guidance:
According to SCR Form 310 – Item 8 (Due Diligence):
“If Buyer terminates this Contract during the Due Diligence Period for any reason other than failure of a separate contingency (Financing, Appraisal, or CL-100), Buyer shall pay the Seller the agreed-upon Termination Fee.”
âś… Because the termination is due to loan denial, this is covered under theÂ
Financing Contingency — not Due Diligence.
No termination fee is owed.
What’s Required:
📨 Loan Denial Letter from the lender
🖊️ Release of Contract (SCR 518) signed by both parties
đź“‚ No Notice of Termination needed
đź’ˇ Broker Tip:
Always confirm why your buyer is terminating before assuming a fee applies.
If it’s tied to financing, appraisal, or CL-100, it’s protected by its own contingency — not Due Diligence.
