Due Dilligence wording for contracts

You are seeking legal advice, so had better run this by a solicitor. If you get it wrong you could be locked into a binding contract when you don't want to be. Never let an agent insert a clause into a contract – legally they cannot anyway (at least in NSW).

Hi Troodyg,

I've used the below one, or a 'cocktail' of it a few times. You can change the wording to suit of course. Usually the RE or the SOlc would do this – depneds on the state. I believe (credit where it is due) theis one was a DD clause used byt the very switched on Mr. ROb Balanda. (contributor to API magazine too)

All the best.

1. “This agreement is conditional upon the buyer conducting investigations and enquiries (‘the enquiries’) about the property and all related matters and being satisfied with the results of the enquiries including and without limitation:

(a)    A survey of the property;

(b)    A building inspection and engineer’s report of any structures on the property;

(c)    The terms of any Grants of Easement registered on the title to the property;

(d)    Any lease and or license agreements relating to any use of the property;

(e)    Zoning and the lawful use of the property

(f)      The requirements of any local or other competent authority having jurisdiction over the property and the terms of any permits, approvals, consents and requisitions of any local or other government authorities;

(g)    Fire safety matters

(h)    Termite and pest inspections of all improvements on the property

(i)      Any encroachments by or on the adjoining properties;

(j)      Soil tests;

(k)    Workplace health and safety matters;

(l)      Any other matter deemed by the buyer to be relevant to the purchase;

1. The buyer will meet any expense of carrying out the enquiries and the buyer will do so entirely at its own risk and will indemnify the seller against all claims or demands that may be made against the seller or which the seller may suffer because of the buyer carrying out the enquiries. The buyer will also reinstate any damage that it may cause to the property during the course of carrying out the enquiries.
2. The seller will permit the buyer and its representatives access to the property at all reasonable times to carry out the enquiries.
3. The buyer will be allowed a period of twenty-one (21) days from the date of this contract in which to conduct the enquiries.
4. If the buyer is not satisfied with the results of the enquiries then the buyer may, in its absolute discretion and without being required to give any reasons, deliver written notice to the seller terminating this contract at any time on or before 5pm on the date twenty-three (23) days from the date of this contract.  “In that event this agreement will be at an end, the deposit must be refunded to the buyer, and after that neither party will have any further claim or action against the other apart from a claim based on a default by one party under the contract prior to termination.”
5. This clause has been inserted for the benefit of the buyer and the buyer may at any time by notice in writing to the seller waive the benefits of this clause.”

Me too.    Talk about overlawyered.  

Thats pretty standard clauses that any developer/builder would use or a variant of… NO developer or builder is going to offer big money or big non refundable deposits until such time as they know for sure from Council whether they can do what they plan to do with the property. thats going to take time, and Councils will dictate that..thats just a harsh reality of the market that the process can take up to 2 years. Some will do a JV with a land owner, others may not, its very dependent on the deal. there can be staged payments upon completion of various stages of DA/BA..all manner of structure is possible.

Some vendors hear the word developer and go "ok I"ll charge them four times the price" thinking it'll work out for them.. when in reality they've just shot themselves in the foot and the developer builder will simply move on to the next deal. with infrastructure charges and other costs associated with actually building stuff these days, what people perceive to be massive profits are in fact, not that massive. I came across a land owner with just that idea in his head pricing his block at twice that of the one next door that was also on the market.. no movement for negotiation, saw $$$$ and went crazy… what happened? He's going to be the only guy in the street with no development. too bad for him.

Options are useful documents to use as are development agreements, but again the ulimate message is goin to be very similar to that example given above.."we're interested but we're not paying until we know for sure because we've been diddled by Council too many times before so if you're interested, this is the process, like it or not"…