The standard Purchase and Sales Agreement as prepared by the
includes a standard section entitled “Due Diligence”. The purpose of the Due Diligence section of the Agreement is to give the Buyer an opportunity to review restrictive covenants of record, easements, condominium rules and the like. The agreement to buy is contingent upon the buyer’s satisfactory review of the documents. Often the Realtors provide 10 – 14 days for review. If a Buyer makes no objection within the specified period of time, the right to object is lost, and the contingency lapses.
However, unless the Seller provides the documents to the Buyer at the time of signing the P&S Agreement, the Buyer may not have a fair opportunity to review them. Often, the documents are not available until a title review and report have been accomplished. A Buyer may not know what is in a particular document until well after the deadline for objection.
Some of the things that come up during the Due Diligence review of easements, restrictive covenants, and condominium documents are:
- Restrictions on the use of the lot (single family residence only, etc.)
- Rights of others to use the land, etc. (easements for access or drainage…)
- Restrictions on improvements such as swimming pools, fences, etc.
- Restrictions on pets (some banned…)
- Restrictions on tenants (no short term…)
- Restrictions on resale
The above list is not a complete list but it offers a sense of the importance of these documents. For a person with a 3 or 4 house cats, an enforceable limit of two is a deal killer!
Perhaps, it is in the Buyer’s best interest to be sure that the contingency lapses for only those documents that have been delivered by the Seller, or perhaps the Due Diligence period should be extended to the date of closing, consistent with the title review.
The lawyers at Welts, White and Fontaine have experience in residential and commercial real estate transactions in Nashua and the surrounding towns in Hillsborough County, and in Windham and the other towns of Rockingham County. Please call us for more information at (603) 883-0797 or contact us through the form at the very bottom of the page.
Author: Thomas J. Leonard
This blog is intended for informational use only. The information contained herein should not be construed as offering legal advice or a legal opinion.