BIC TIP #1199: Dating Is Good, Always Fill In the Due Diligence Date
Dating is good. At least in the real estate contract world, says Stephen Long, The Notorious BIC. This tip is about the due diligence date in the Offer to Purchase and Contract (Form 2T). Even when your buyer wants to waive or shorten due diligence, always put a date in that blank.
The Problem With N/A
When a buyer wants to make their offer more competitive by waiving the due diligence period, some brokers write “N/A” in the due diligence date blank or leave it empty. It seems logical. No due diligence, no date.
The problem, according to Stephen, is that it creates ambiguity. Does “N/A” mean there is no due diligence period at all? Or does it mean the date was never agreed upon? An ambiguous contract is an invitation to a dispute, and that is the last thing you want when money and a home are on the line.
Use the Contract Date
Stephen’s solution is simple and precise: fill in an actual date, even if it is the same date as the contract. That makes it obvious to everyone that there is a due diligence period, and that it is extremely short or expires essentially as soon as the parties are under contract.
There is nothing left to interpret. The buyer, the seller, both brokers, the lender, and the closing attorney can all see exactly when the period ends.
Make Sure Your Buyer Understands
A very short due diligence period has real consequences for the buyer. Inspections, appraisal, insurance, and other investigations may need to happen before the offer is even written, and the buyer’s ability to walk away later may be limited. Have a clear conversation with your client about the trade-offs before they choose this approach, and document that discussion.
If you or your client have questions about the legal effect of a particular date, consult a real estate attorney.
The Practical Takeaway
Never leave the due diligence date blank and never rely on “N/A.” Put a real date in the blank, even if it is the contract date. Your buyers and sellers stay protected, and your contracts stay buttoned up, solid, and secure.
