Envite Realty Raleigh Real Estate Contractor
When do I need to re-disclose on a closing disclosure?
October 11, 2016

Is a back up contract a material fact?

We have all been in multiple offer situations in recent years.  Our buyers finally win and we all celebrate!  Everything is good. Right?  We start down our due diligence path getting our inspections, ordering the appraisal and getting through the loan approval process.  We get the results of our inspections and find there are a lot of items that need to be addressed.  We present our due diligence repair request and to our chagrin the seller refuses to address any items.  Our buyers say if they will not address the inspection items, we will terminate.  The listing agent then reveals, the seller refuses to address the items and will proceed with the back-up contract.  What?  Back up contract, what back up contract? I complain to the listing agent, the back up offer was not disclosed to us.  It is a material fact, right?

John Wait, Martin & Gifford, PLLC’s brief from NC Realtors.org sited the North Carolina Real Estate Commission has stated that in real estate transactions, material facts fall into several categories: (1) significant facts about the property itself; (2) facts relating directly to the property, such as a pending zoning change; (3) facts concerning a contracting party’s ability to complete the transaction; and (4) facts that are known to be of special importance to a party. If a fact falls into one of these categories, then the fact is a material fact that must be disclosed to any party an agent deals with, even if the party is not represented by the agent.

The back up contract does not affect the property nor does it limit the seller’s ability to complete the transaction.  Therefore, it is not a material fact and is not required to be disclosed to the buyer.

This is an important point to stress to your buyers.  In a multiple offer situation, set the expectation you may have less leverage negotiating repairs. This can save you a headache later.


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