REALWorld Law

Sale and purchase

Due diligence

Do buyers usually carry out due diligence?

United States

United States

Yes. In many but not all localities in the United States it is customary for the buyer to be entitled to a period after signing the contract, known as a ‘due diligence’ period, in which to conduct investigations of the property and during which the buyer may withdraw from the transaction. The contract should specify the length of the due diligence period (usually in the range of 30 to 90 days) and the scope of documents and information that must be provided by the seller to the buyer before or during this period.

If the contract does not provide for a due diligence period, the buyer should conduct its due diligence investigations prior to signing the contract. As part of its due diligence investigations the buyer will, with the aid of its counsel, review the title report prepared by a title insurance company, the underlying title documents, the survey, seller searches, certificates of occupancy and permits, any environmental reports and physical condition reports, all contracts affecting the property, including:

  • leases
  • any zoning reports
  • insurance certificates
  • appraisals, and
  • financial documents