Understanding the Termination Fee in SC

In South Carolina real estate, a termination fee, also known as a due diligence fee, is a payment made by the buyer to the seller when a buyer terminates a contract during the due diligence period. This fee is only paid if the buyer terminates the contract for reasons within the due diligence period and not due to other contingencies like financing or appraisal issues. The termination fee is non-refundable. 

Key points about the termination fee in SC:

• Purpose:

  It compensates the seller for taking the property off the market and allowing the buyer time to inspect the property and conduct due diligence. 

• Timing:

  The fee is paid to the seller (or their agent) when the buyer delivers a Notice of Termination during the due diligence period. 

• Negotiation:

  The amount of the termination fee is negotiated between the buyer and seller. 

• Not for all terminations:

  It's not owed if the buyer terminates due to financing, appraisal, or other contingencies. 

• Not Earnest Money:

  It's separate from earnest money and is not held in escrow with the earnest money. 

• Making an Offer Stand Out:

  A termination fee can make a buyer's offer more attractive to sellers, especially in competitive markets. 

• Example:

  A buyer might offer a termination fee of $500 to $1,000 to show commitment while they investigate the property. 

• Termination Fee vs. Earnest Money:

  The termination fee is different from earnest money, which is a deposit to show good faith and is typically held in escrow. 

• Legal Advice:

  It's crucial to consult with a real estate professional or attorney for specific advice related to your situation.