What is due diligence in the contract? (Georgia)
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What is due diligence in the contract?
The due diligence period is a negotiated number of days in which the buyer for any reason at all can void the contract and have his earnest money returned. In this period they can inspect and also attempt to amend the purchaser and sale agreement (although the seller has no obligation to agree to any amendments) This is typically the time when buyer does any/all inspections of the subject property. So actually in Georgia when it's an "option" contract until the
due diligence period is over.
Buyers and sellers often have very different ideas of what the length of the negotiated period should be, with sellers wanting a shorter period and buyers wanting a longer period. It has averaged from 7 to 21 days on the contracts I have written over the past few years since this was introduced in the contract forms I use.
During the due diligence period buyers have reasonable access to the properties for inspections. Of course I ask buyers to be respectful of owner occupied homes and get as much scheduled at the same time as possible. Sometimes buyers want/need to go back to a home a few times. For example if a home inspector finds electrical and HVAC issues on inspection the buyer may want to have a certified HVAC technician look at the unit and a licensed electrician look at the electrical issues and that may require two additional appointments. With vacant and foreclosed homes access is a little easier with no sellers schedules to work around, but always the selling agent should be present when home is being accessed without specific permission in writing to not be present.
In the state of Georgia, real estate agent fill in the blanks of contracts have been previously written by attorneys and we assist in obtaining all signatures to make it a ratified contract. Once that happens it is then provided to lenders and attorneys for the purpose of completing the transaction.
During the due diligence period the buyer may do three things:
- Attempt to negotiate repairs or an altered purchase price due to findings
- Withdraw from the contract and have earnest money returned
- Simply let it expire and then the option period is over and it becomes and "as is" contract and all parties are legal bound to preform as stated in the terms of the contract.
This is from the GAR contracts I use:
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