The due diligence process is a vital part of a commercial real estate transaction. Due diligence permits buyers to look over the property with their professional advisors and determine whether the purchase is appropriate for them.

In a lot of cases the contract will specify that the seller provides all the information and documents needed by the buyer in order to perform their due diligence. These include title policies, surveys and improvement location certificates (ILC’s) as well as zoning matters and any prior zoning approvals that could affect the property. Due diligence periods are usually negotiated to be 30-60 days, depending on the specific needs of both parties.

Once a buyer has completed their due diligence, they will typically schedule engineering, structural, building and mechanical inspections. A box will be included in the contract to indicate the date of due diligence as well as an optional survey. After these dates, the buyer will receive a report on the results of their inspections. They can decide to continue with the purchase or end the contract.

Another commonly negotiated item is the Association Documents Objection Deadline which provides the buyer with a specified period of time to review HOA documents, including pet, architectural control, covenants and parking regulations among other things. This is usually set at 10-14 business days following the MEC.

Also, a new ILC or survey may be required if the previous one is not up-to-date or if there is a problem regarding the property lines and boundaries. The New ILC/Survey Deadline is a date that outlines when the purchaser must receive these documents and any objections should be resolved or withdrawn by the deadline.

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