How do I make sure the property I am purchasing does not have issues? – August 2024
Even though a typical REIQ Contract has standard terms about building & pest inspections, not always will the report allow a buyer to terminate a contract under those standard terms. When the issues in a report fall between the cracks (no pun intended), a due diligence clause can be a life saver.
- Financial Assurance: The clause provides the buyer with the opportunity to review financial aspects such as land taxes, and any outstanding debts, caveats, or liens on the property.
- Negotiation Leverage: If issues are discovered during the due diligence period, the buyer can negotiate repairs, price reductions, or even withdraw from the contract without penalty; meaning a buyer won’t be forced to buy something they no longer want.
- Legal Protection: Including a Due Diligence clause offers legal protection, giving the buyer a specified period to conduct investigations and make an informed decision. This reduces the risk of future legal obligations which could pass to the buyer, and disputes related to undisclosed issues.
- Peace of Mind: Ultimately, a Due Diligence clause provides peace of mind, ensuring that the buyer is fully informed about the property and can proceed with confidence following a thorough investigation.
