In June 2022 the North Carolina Supreme Court settled a question every buyer should understand before signing: in Reynolds-Douglass v. Terhark, the Court held that an Offer to Purchase and Contract is an evidence of indebtedness under N.C.G.S. § 6-21.2. That means the attorney’s fee clause in the contract is enforceable. When a buyer breaches and the seller wins a lawsuit to recover the earnest money deposit, the seller can also recover reasonable attorney’s fees.
What happened in Reynolds-Douglass v. Terhark?
The case that settled this question started in 2017 with a $250,000 offer on a Wake County home. The standard Offer to Purchase and Contract called for a $2,000 due diligence fee and a $2,500 additional earnest money deposit. Three days after signing, the buyer asked for a $5,500 price cut; when the seller said no, the buyer walked without paying either fee. The seller took the due diligence fee claim to small claims court and won, then added the earnest money deposit and attorney’s fees. The trial court’s total award came to $18,343.92, including $13,067.70 in attorney’s fees. The case reached the Supreme Court on appeal.
Why did the court call the contract an evidence of indebtedness?
The legal question was whether N.C.G.S. § 6-21.2 applies to a residential purchase contract. The statute makes attorney’s fee clauses enforceable on notes, conditional sale contracts, and other evidence of indebtedness, and North Carolina’s general rule otherwise leaves each side paying its own fees. The Supreme Court held that an Offer to Purchase and Contract qualifies: it is a written instrument, signed by the parties, that on its face evidences a legally enforceable obligation to pay money, the definition set out in Stillwell Enterprises v. Interstate Equipment. The Court further confirmed that fees spent defending the judgment on appeal are part of what the prevailing party can recover.
What did the dissent argue?
Two members of the Court dissented on two grounds. First, they read N.C.G.S. § 6-21.2 as a commercial-transaction statute, not one meant for residential sales contracts. Second, they argued the statutory formula should have capped the fee award at 15 percent of the outstanding balance, which on the $2,500 earnest money deposit would be $375, not the $13,067.70 the trial court awarded. The majority answered that the statute’s language does not limit it to commercial deals and that the contract expressly authorized reasonable attorney’s fees for the prevailing party.
How does this play out in Bertie County?
Bertie County is farm and timber country. Peanuts, cotton, soybeans, and timber dominate, and a large share of transactions involve big tracts: farmland, hunting land, river bottomland along the Cashie and the Roanoke. Due diligence on those deals is about boundary surveys, timber rights, agricultural use value, and access, not just a home inspection. With a thin field of local closing attorneys and title offices, title work often reaches back through older estates. That makes the earnest money decision heavier: the money you put down is real, and under the 2022 ruling the seller’s attorney’s fees are on the line if you walk after diligence.
Where do Bertie County closings actually happen?
The county offices behind a Bertie closing are practical and specific. The Register of Deeds in Windsor records deeds, deeds of trust, powers of attorney, and plats, makes records searchable online back to 1977, and accepts electronic recordings. The county’s online real property search, GIS parcel viewer, and tax payment portal are the public tools buyers and closing attorneys use. Contract and foreclosure cases are filed at the courthouse in Windsor. And if you are buying rental property, Bertie’s Tourism Development Authority began collecting a 6 percent occupancy tax on short-term rentals in September 2025, a direct cost to factor into the deal.
A local example: Windsor
Imagine a buyer who signs a contract on a 50-acre hunting tract along the Cashie River, pays a $1,000 due diligence fee and a $2,500 earnest money deposit, then discovers during diligence that the access easement across the neighboring parcel is not what the seller described. The buyer can walk during the diligence period and get the earnest money back, losing only the due diligence fee. If the buyer lets the period expire and then walks, the seller keeps the earnest money as liquidated damages, and under the 2022 Supreme Court ruling the buyer can also owe the seller’s reasonable attorney’s fees if the seller has to sue to collect the deposit. The survey that should have been done during diligence becomes the most expensive part of the deal.
The bottom line
Know the difference between the due diligence fee and the earnest money deposit before you sign. The fee is non-refundable once the contract is effective. The deposit is at risk once the diligence period expires, and under the 2022 Supreme Court ruling the seller’s reasonable attorney’s fees can be added to it if a lawsuit becomes necessary.
If you are in a dispute over a contract, a North Carolina real estate attorney is the right person to talk to. This article explains what the court decided, not what any particular contract says, and every contract should be reviewed by a lawyer before you sign it.
