Due Diligence
Due diligence is the buyer's investigation period between signed contract and closing, during which the buyer verifies financial performance, physical condition, title, environmental, and lease information.
What it means
Typical CRE due diligence includes: review of leases, estoppels from tenants, T-12 and operating expense verification, property condition assessment (PCA), Phase I environmental site assessment (Phase II if Phase I flags), ALTA survey, title commitment and exceptions review, zoning compliance letter, utility and tax records, and insurance loss runs.
The due-diligence period varies by asset class — 30 days for a stabilized NNN property, 60–90 days for a complex multifamily or value-add deal. A buyer who terminates during due diligence typically recovers their deposit; after, they forfeit it.