What Is Due Diligence?
Due diligence is the comprehensive investigation a buyer conducts before finalizing a real estate purchase. It covers the physical condition of the property, its legal status, environmental issues, zoning compliance, financial performance (for investment properties), and any other factors that could affect the property's value or the buyer's intended use.
In Florida residential transactions, the standard FAR/BAR contract provides an inspection period (typically 10 to 15 days) during which the buyer can conduct due diligence and cancel the contract for any reason, receiving a full refund of the earnest money.
Due Diligence Checklist for Florida Properties
Physical Inspection
- General home inspection — Structure, roof, plumbing, electrical, HVAC, and appliances.
- Termite/WDO inspection — Required by most lenders. Florida's climate makes wood-destroying organism inspections critical.
- Roof inspection — Florida insurers often require a roof inspection for homes with roofs older than 15 years.
- Wind mitigation inspection — Can reduce homeowner's insurance premiums by documenting hurricane-resistant features.
Legal Due Diligence
- Title search — Identifies liens, encumbrances, and ownership history.
- Survey — Confirms boundaries, identifies encroachments and easements.
- HOA/Condo documents — Review of covenants, financials, and reserves.
- Permit history — Confirm all improvements were properly permitted and passed final inspection.
Environmental
- Phase I environmental assessment — Standard for commercial properties. Identifies potential contamination.
- Flood zone determination — FEMA flood zone status affects insurance requirements and costs.
- Soil testing — Important for vacant land and new construction.
Related Terms
- Title Search — Legal due diligence on ownership
- Survey — Physical boundary verification
- Earnest Money — Refundable during the due diligence period
- Appraisal — Value verification during due diligence
Barnes Walker Due Diligence Support
Barnes Walker Title coordinates title searches, surveys, and document review as part of every closing. Submit a title inquiry for assistance.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC