What Is the Due Diligence Period?
In a Florida real estate contract, the due diligence period is the buyer's investigation window. During this critical timeframe, the buyer has the contractual right to:
- Hire a home inspector to examine the property's physical condition.
- Order an appraisal to confirm the property's value.
- Review the title search for liens, encumbrances, and ownership defects.
- Examine survey results for boundary disputes or encroachments.
- Review HOA or condo association financials, rules, and pending litigation.
- Investigate zoning compliance and permitting history.
- Conduct environmental assessments (Phase I for commercial properties).
The Walk-Away Right
The most powerful feature of the due diligence period is the buyer's right to cancel. In many Florida contracts (particularly the "AS-IS" FAR/BAR contract), if the buyer discovers anything they do not like during the due diligence period, they can terminate the contract for any reason and receive a full refund of their earnest money deposit.
Once the due diligence period expires, the buyer loses this free exit. If the buyer attempts to cancel after the deadline, they typically forfeit their earnest money deposit to the seller as liquidated damages.
Negotiating the Length
The length of the due diligence period is fully negotiable. In a competitive Florida market, buyers who offer a shorter due diligence period (or waive it entirely) make their offer more attractive to sellers. However, waiving due diligence is extremely risky; the buyer gives up their right to discover defects before committing.
Related Terms
- Earnest Money — The deposit at risk if the buyer cancels after due diligence expires
- Title Search — A critical investigation conducted during due diligence
- Appraisal — The valuation ordered during due diligence
Barnes Walker Real Estate Contracts
Barnes Walker's real estate attorneys negotiate strategic due diligence provisions in Florida purchase contracts, protecting our buyer clients' investigation rights while structuring seller-favorable deadlines for our listing clients. Request a legal inquiry for assistance.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC