🧩 Carolina Elite Real Agent Scenario
Due Diligence vs. Separate Contingencies – Understanding When the Termination Fee Applies
🏠 Scenario
An agent’s buyer conducts inspections during the Due Diligence Period and finds several electrical and foundation issues. The buyer decides not to proceed and sends a termination using SCR Form 313, but doesn’t include the Termination Fee listed on page 1 of the contract.
The listing agent refuses to release the buyer’s Earnest Money, claiming the buyer terminated improperly.
The buyer insists that “the inspection failed,” so no Termination Fee is owed.
🧑⚖️ Broker Guidance
Under SCR Form 310 (06/25 Revision):
The Termination Fee is only owed if the buyer terminates during the Due Diligence Period for Due Diligence reasons.
Separate contingencies (Financing §7, Appraisal §10, CL-100 §11, Sale of Buyer Property, etc.) are not part of Due Diligence.
Inspections and repair negotiations fall within Due Diligence reasons, unless the termination is tied to one of those separate clauses.
If the buyer terminates for inspection dissatisfaction, that is a Due Diligence reason → Termination Fee is owed.
If the buyer terminates because of a loan denial, low appraisal, or failed CL-100, those are separate contingencies and no Termination Fee is owed.
📘 Citations:
§ 8 (Due Diligence): “Termination Fee is only owed if Buyer terminates during the Due Diligence Period for Due Diligence reasons.”
§ 7 (Financing): If financing fails, either party may terminate by Notice.
§ 10 (Appraisal): Seller has 5 days to amend price to appraised value; if declines, Buyer may terminate.
§ 11 (CL-100): If Seller declines to treat or repair, Buyer may terminate.
⚙️ Action Steps for Agents
- Identify the reason for termination.
Inspection dissatisfaction = Due Diligence termination → Termination Fee applies. - Loan denial / Low appraisal / CL-100 failure = Separate contingency → No Termination Fee.
- Use the correct form.
Due Diligence termination: Use SCR Form 313 and include the Termination Fee.
Contingency termination: Submit a Release of Contract with supporting documentation (e.g., lender denial letter, appraisal, CL-100 report). No Notice of Termination is required. - Send within the Due Diligence Deadline.
Missing the deadline results in an AS-IS contract; Earnest Money may be forfeited. - Document everything.
Retain copies of inspection reports, lender letters, and other proofs in the file. - Educate the client before writing the offer.
Explain what the Termination Fee is, when it applies, and how it protects both parties.
💡 Broker Tip
“Every termination must fit into a box — Due Diligence or Contingency. Knowing which box applies determines whether the buyer owes a Termination Fee or receives Earnest Money back. When in doubt, slow down, read § 8 through § 11, and document the reason for release.”
