Due diligence is a crucial moment for commercial real estate buyers. Commercial properties in contrast to residential real estate require a thorough inspection and judgment in order to ensure that the purchase is an acceptable cost. During due diligence, buyers plan for environmental, structural, building and mechanical inspections. They also review property tax records, confirm the zoning restrictions, and search for legacy liabilities left behind by previous owners.
The contract typically lays out an outline of timeframe and deadline for the completion of due diligence. For instance, the due diligence documents delivery deadline might be seven to fourteen days from date of contract acceptance. The deadlines allow both the buyer as well as the seller the opportunity to negotiate any issues that may come up during the due diligence process.
The deadline for termination of documents in the association is a different deadline. This is the time which the buyer is able to terminate the contract if he discovers information in the HOA paperwork that makes the project financially unsustainable. This typically occurs between 10 and 14 days due diligence documents delivery deadline after the MEC. The contract also specifies an objection resolution date – the deadline at which the buyer has to resolve any issues with the seller that have not been resolved satisfactorily. If there is no solution by the deadline, the contract will automatically terminate. If the information discovered during due diligence is so egregious that the buyer needs to seek an « Notice to End » from their real estate agent, and an agreement to release the earnest money.