Due diligence period
A due diligence period is a defined window in which a buyer investigates a property and decides whether to proceed.
It is more common in commercial and investment transactions than in ordinary residential ones, and it is broader than an inspection contingency.
Broader than inspection#
An inspection contingency is typically tied to condition — what a professional examination reveals about the building.
A due diligence period, depending on the drafting, permits withdrawal on anything: title problems, zoning that does not permit the intended use, financing that did not materialise, rent rolls that did not survive verification, or a simple change of mind.
Which it is depends entirely on the wording, and the wording is worth reading rather than assuming.
What it is, commercially#
An option.
The buyer has tied up the property and can walk. The seller has taken it off the market and cannot.
That is a real transfer of value, which is why sellers resist long periods and why some transactions treat part of the deposit as a non-refundable option fee — payment for the option rather than a deposit against the price.
What to actually do in it#
Everything that cannot be undone afterwards.
Inspection, plus specialist follow-ups — sewer scope, structural, radon, septic compliance on rural property.
Title commitment review. Requirements and exceptions, and pulling the recorded documents behind any easement or covenant that matters.
Survey, on anything with boundary uncertainty or where a survey exception needs removing.
Zoning and permitted use, confirmed with the city — and separately, any restrictive covenants, which are private and are not enforced or waived by the city.
On income property: actual rent collections rather than the schedule, the leases themselves, the security deposit ledger, and the rental licence position including whether it transfers.
Deadlines end rights#
The same rule as every contingency.
The period expires by the calendar. Nothing announces it. A defect discovered the day after it closes is the buyer's.
Notice to withdraw must be given in writing, in the contractual form, before the deadline. A conversation with an agent on the last afternoon is frequently not notice at all.
Length#
Long enough to accommodate the sequence, not just the first visit.
Schedule the inspection, receive the report, get the specialist assessment, review the title commitment, obtain the survey, confirm the zoning. That is weeks rather than days on anything other than a simple house.
A period that covers only the inspection has covered the beginning of the work.