How do we properly finalize a termination with the first buyer so we can accept a new offer without creating disputes? – North Carolina

Short Answer

Under North Carolina real estate law, a seller should not treat the first contract as ended until the contract has been validly terminated in writing and all issues about earnest money and any due diligence fees are clearly addressed. The safest approach is a signed termination (or mutual release) that tracks the contract’s termination clause and confirms who gets any deposit funds. Only after that written termination is effective should a seller sign a new primary contract; until then, any later offer should be handled as a backup contract.

Understanding the Problem

The question is focused on one decision point: how a North Carolina seller can end a signed purchase contract with the first buyer in a clean way so a new offer can be accepted without triggering disputes about ownership, contract rights, or deposits. In practice, that often arises when the first buyer asks to terminate during the due diligence period, fails to meet a financing or inspection deadline, or threatens to walk away but refuses to sign a release. The concern is how to make sure the first buyer no longer has contract rights in the property before a later offer becomes the primary contract for the same home.

Apply the Law

Under North Carolina law, real estate contracts are enforced according to their written terms, layered on top of general contract rules and a few statutory rights to cancel in limited situations. The standard North Carolina residential offer to purchase form sets out when and how a buyer or seller may terminate (for example, during the due diligence period, after certain disclosures, or for a buyer default) and what happens to any earnest money or due diligence fee. A seller who wants to move on to a new buyer must end the first contract through a method the contract recognizes, usually with clear written notice and, best practice, a mutual termination agreement that allocates all deposits.

Key Requirements

Valid ground for termination: The party ending the contract must rely on a termination right found in the written contract or under North Carolina law (such as a due diligence termination, failure of a condition, or material breach).
Proper written notice: The terminating party must give written notice in the manner the contract requires (for example, delivery to the addresses listed in the contract, or by the specific methods allowed).
Clear resolution of deposits and rights: The parties should document who gets earnest money and any other deposits, and confirm that neither side has further rights or claims under the first contract before a new primary contract is signed.

What the Statutes Say

N.C. Gen. Stat. § 47E-5 (Residential disclosure & cancellation) – gives buyers a limited right to cancel a contract if the seller did not timely provide required disclosure statements, with written notice and a refund of deposits.
N.C. Gen. Stat. § 39-39 (Risk of loss in real estate contracts) – addresses what happens to the contract and money paid if the property is destroyed before title or possession transfers, which can interact with termination and refund issues.

Analysis

Apply the Rule to the Facts: With no specific facts, consider two common North Carolina patterns. In the first, the buyer terminates within the due diligence period using the contract’s termination clause; the parties sign a short written termination confirming that the buyer keeps or forfeits certain deposits as the contract provides, and the seller may then safely sign a new primary contract. In the second, the buyer misses a financing or earnest money deadline; the seller treats this as default, gives written notice that the contract is terminated under that default clause, and obtains a signed release addressing the earnest money before accepting a later offer as anything other than a backup contract.

Process & Timing

Who files: Typically the seller’s or buyer’s real estate attorney or agent prepares a written termination and release based on the purchase contract. Where: This is handled privately between the parties, not filed with a court. What: A contract-specific notice of termination and, ideally, a mutual termination/release form and any escrow instructions to the closing attorney or escrow agent for earnest money. When: The terminating party should send written notice before any relevant deadline in the purchase contract (for example, before the end of the due diligence period or within any statutory cancellation window).
After notice is sent, the parties (often through their attorneys or brokers) confirm in writing how earnest money, due diligence fees, and any other deposits will be handled and instruct the escrow holder accordingly. This back-and-forth can take days to weeks, depending on whether there is any disagreement.
Once the written termination and release are fully signed and the escrow holder has clear, written instructions for any funds, the seller’s side can mark the first contract as ended and proceed to sign either a new primary contract with the next buyer or convert a backup contract into a primary contract. The closing attorney then uses the new primary contract to prepare the closing documents.

Exceptions & Pitfalls

Some contracts allow one side to terminate only after giving the other side a chance to cure a default; skipping that step can make a termination invalid.
If the buyer refuses to sign a release of earnest money, the escrow holder may be required to hold the funds or even file an interpleader in court, which delays resolution; a seller can still terminate the contract if the contract allows but should proceed carefully before treating the deposit as forfeited.
Accepting a second offer as a full primary contract before the first contract is clearly ended can create overlapping claims to purchase the same property and invite specific performance suits.
Improper or unclear written notice (for example, sending notice to the wrong address or not following contract delivery rules) may leave the first buyer with an argument that the contract never actually terminated.

Conclusion

To properly finalize a termination with the first buyer in North Carolina, the seller must rely on a valid contractual or statutory termination right, give written notice in the manner and by the deadline the contract requires, and document how all deposits and rights are resolved. A short, signed termination and mutual release that addresses earnest money and confirms no further claims under the first contract greatly reduces the risk of later disputes. The key next step is to obtain that fully signed termination and release before signing a new primary contract and moving forward with a different buyer.

Talk to a Real Estate Attorney

If a signed contract with a first buyer needs to be terminated so a new offer can move forward cleanly, our firm has experienced real estate attorneys who can help clarify termination rights, notices, and deposit issues under North Carolina law. Call us today at 919-341-7055.

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for any specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If there is a deadline, act promptly and speak with a licensed North Carolina attorney.