Does a buyer have to terminate before the end of the Due Diligence Period if there is no Earnest Money Deposit in the contract?

QUESTION: Hey there! So, I’m sure you guys don’t remember, but you helped out a friend of mine a few years ago before he left on the turkeys’ annual “big trip.” Before he left, he told me how helpful you were. I’m a barn cat, so the turkeys’ yearly vacation plans do not really interest me, but the energy this time of year always brings some really good real estate opportunities!

I’m representing a woodchuck who is selling a very large tunnel under the turkey roost. He was very clear during our listing appointment that he would not do any repairs and he wanted an “as-is” sale. He accepted a contract with a boogle[1] of weasels who promised a quick, as-is, sale. We went under contract on Form 2-T (Offer to Purchase and Contract), and we are getting close to the end of the Due Diligence Period. My client, against my advice, insisted on only getting a Due Diligence Fee and there is no Earnest Money Deposit. The weasels are now demanding hefty concessions from my seller even though this sale was supposed to be “as-is.” They are saying that if they do not get them, then they will simply wait until Closing to terminate to make sure my client misses peak selling season!

Can the weasels do this? Is there anything I can do to force them to decide before the end of the Due Diligence Period? A couple of the smarter turkeys have reached out to me and are desperate to buy this property before their trip for some weird reason.

ANSWER: Unfortunately, this scenario is common when Form 2-T does not have a meaningful Earnest Money Deposit in escrow. The Due Diligence Period is merely a negotiated amount of time in which the buyer can investigate the property and choose to terminate for any or no reason without breaching the contract. A buyer may terminate after the Due Diligence Period expires, and if they do not have a valid reason for doing do so, they will likely be in breach of contract.

If a buyer breaches Form 2-T, the seller is only entitled to liquidated damages in the amount of the Earnest Money Deposit and the Due Diligence Fee as a remedy. If there is no Earnest Money Deposit in escrow, the buyer’s exposure for breaching the contract is limited to the non-refundable money they have already paid. This means the buyer may not have much incentive to evaluate the property thoroughly prior to the end of the Due Diligence Period.

The Earnest Money Deposit is therefore a very important contractual term to make sure the buyer has a meaningful reason to pursue their investigations with the appropriate urgency before the end of the transaction.

All that said, your seller may have a few options to explore in this scenario.

First, every contract has an implied duty of good faith and fair dealing. We have written how important this duty is here. If a party to a contract is violating this duty, then they may be in breach, and the non-breaching party may be entitled to damages or other remedies, such as termination of the contract.

Second, if a party to a contract has a future obligation to perform, and then that same party indicates that they might refuse to perform that obligation when the future time comes, then the other party may treat that refusal as a breach of contract. In the legal world, this concept is called “anticipatory repudiation,” and we have written about it in more detail here. If a contracting party anticipatorily repudiates their obligation to perform, and that repudiation is a breach, then the non-breaching party may have a right to terminate.

In your case, we do not have enough facts to know whether either of these legal theories would help. Hopefully, your client and the weasels will be able to work this out by consent, but if they cannot, you should advise your client to seek legal counsel and see if they have legal recourse to get out of the contract. Good luck!

[1] A pack of weasels is called a boogle or confusion, or less commonly, a sneak.

Release Date: 11/20/2025

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