Contracts
What is a due diligence period in a commercial real estate contract?
AA period to negotiate the price after signing
BA specified time for the buyer to investigate the property before being bound to close✓ Correct
CA government review period
DA mortgage approval period
Explanation
A due diligence period gives the buyer time to investigate all aspects of the property (physical inspections, financial review, environmental assessments, title, zoning) before the purchase becomes unconditional. Common in commercial transactions.
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Key Terms to Know
Zoning
Local government regulations that control land use by dividing areas into zones specifying permitted uses, building sizes, and densities.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
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