Due diligence is a vital part of a commercial real property transaction. It allows buyers to conduct an investigation of the property using their own professional advisors and decide whether the purchase is suitable for them.

In many cases, the contract will stipulate that the seller must provide all the documents and information necessary for the buyer to conduct their due diligence. These include survey policies, title policies, and improvement location certificates (ILC’s) along with Zoning matters and any prior zoning approvals that could affect the property. A due diligence period is usually negotiated to be 30-60 days, depending on the specific requirements of the parties.

Once a buyer has completed their due diligence, they will schedule mechanical, structural engineering and building inspections. A box will be added in the contract that indicates the date of due diligence as well as an optional survey. The buyer will be provided with an written report of the results of their inspections. The buyer will then decide whether to keep the purchase or to cancel the contract.

Another item that is frequently negotiated is the Association Documents Objection Deadline which provides the buyer with a specific amount of time to review HOA documents, like pet, architectural control, covenants and parking regulations, among others. The deadline is usually set for 10-14 business days from the MEC.

Also, a new ILC or survey might be required if the previous one is not current or if there is a problem regarding the property lines and boundaries. The New ILC/Survey deadline is a date that specifies the time at which the buyer must receive the document and any objections or withdrawals must be made prior to the deadline date.

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