The due diligence period is an essential period for any commercial real estate purchaser. Unlike residential real estate where there are a myriad of consumer protection laws commercial properties require meticulous examination and judgment to ensure the purchase is a good investment at a fair cost. During due diligence, buyers make arrangements for environmental and structural inspections as well as mechanical and building inspections. They also collect property tax records, verify the restrictions on zoning and search for any past liabilities from previous owners.
The contract usually outlines a timeline and a deadline for the completion of due diligence. Due diligence documents are usually delivered within seven or fourteen business days of the contract acceptance date. The deadlines offer both the buyer as well as the seller the chance to resolve any issues that may come up during the due diligence process.
The deadline for a document termination by 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 documentation that renders the project unfinancial. This usually occurs between 10 and 14 business days following the MEC. The contract also specifies an objection resolution deadline – the time at which both parties must come to a solution to any issues M&A business advisors that the seller has not satisfactorily resolved. The contract will automatically expire in the event that no solution is found within the timeframe. If the information discovered during due diligence is so indecent that the buyer needs to be able to request a “Notice to Terminate” from their real estate agent, and a release of earnest money.