Due Diligence

There was a time when the concept of “due diligence “ was actually that. The deal was done, provided that there was confirmation  of all the material facts. It was an investigation, or audit,of the facts as presented.

However, very often now we are seeing “due diligence”  clauses which in essence are  clauses which commit the vendor to the sale, but the purchaser can walk away for any reason. Or no reason. They are in effect saying “lets’ sign up, and then I’ll think about it”.  And what that often means is that a property is put under contract for a time, which then effectively takes it off the market. When a buyer bails it can be difficult regaining momentum.

We are now coming to the conclusion that we need to see specific Due Diligence clauses in contracts. Clauses that in effect say “I am buying this property, as long as there is proof that what you have told me about the tenant/IEP/roof etc is correct .“

A Sale and Purchase agreement is a legal document, but the inclusion of very vague Due Diligence clauses is diminishing it’s importance, and sending a message that a deal is not necessarily a deal.

Is it time we saw some backbone in negotiations, and only insert DD clauses where there is a specific reason