Are you considering buying residential property for a residence, or perhaps for rental income? Are you purchasing a commercial property, such as an office building, warehouses, or even raw land to build on later? Regardless of the type of property that you wish to buy or the reason for purchasing, you need to consider both inspections and due diligence.
Many times, people refer to inspections and due diligence in the same sentence. A closer look at these terms in use shows that they are very different, and not only do they carry different meanings, they serve completely different purposes.
Let’s start with inspections. In a contract for the purchase of real estate, unless the property is being purchased in “As Is” condition, the contract will normally provide a set period of time for a buyer to conduct inspections on the property. Inspections include, for example, checking the air conditioner and heating systems for proper function, making sure that there are no leaks on the roof, if purchasing an office building, that its elevator(s) work properly, have been inspected as required, etc.
Due diligence is not the same thing, although you do “inspect” certain matters concerning the property. For example, in buying raw land, you may wish to do an updated survey to ensure that the property being sold is what you agreed to purchase. If you are being a property with tenants, you will want to see the leases, the rent roll (list of monthly rental payments made by each tenant), any existing insurance policies and the like.
In both cases, there is usually a set amount time in which you will be allowed to conduct inspections and perform due diligence. You should be prepared to perform both inspections and due diligence before you sign the contract, as usually, the clock starts to tick when the contract is signed, and the initial deposit is paid. You need to be ready to move on these two important items immediately. We are able to assist you with both inspections and due diligence.