When you are purchasing a new home, piece of land or commercial property in Florida, it’s a good idea as a real estate buyer to have a lawyer helping you. Your goal as a homebuyer is to get what you paid for. Real estate can be highly complex, especially when dealing with a commercial property, and a good real estate attorney can be an invaluable asset in ensuring that your real estate transaction is an overall success. Your real estate lawyer will help prepare and negotiate a purchase agreement, help you through the buyer’s due diligence inspection period, and then review deed, title insurance commitment and other closing documents your behalf, to ensure that everything that is being done throughout the transaction is in your best interest.
What Is the Due Diligence Inspection Period in Real Estate?
The due diligence period in a real estate contract is defined as a buyer’s obligation to thoroughly investigate a property within a specified time to determine whether the buyer remains satisfied with the property before finalizing the purchase. In real estate, due diligence includes reviewing documents and contracts, thoroughly inspecting the property, and evaluating risks associated with a property or piece of land prior to purchasing. It is basically “doing your homework” prior to purchasing.
When conducting a real estate transaction, the due diligence period typically starts as soon as a purchase and sale agreement has been accepted by both the buyer and seller, and all necessary escrow deposits have been made. During the due diligence period, it is the responsibility of the buyer to conduct all necessary inspections and review all important documentation to ensure that the property they are looking to purchase is without major defects and that they are getting their money’s worth.
A good real estate attorney can assist you in preparing and negotiating a contract for purchase of the real property that includes a due diligence inspection period with broad wording to allow you to check for obvious, or patent, and non-obvious, or latent defects. For reference, a patent defect in real estate refers to a flaw, dangerous condition, or other deficiency which is reasonably apparent to an ordinary person and can be seen with the naked eye. For example, if you walked into a house and saw immediately that the house is filled with water due to a leak, that would be considered a patent defect. In contrast, a latent defect refers to a hidden or concealed defect; one which could not be discovered by any ordinary person inspecting the property. One of the most common latent defects which has become a hot topic in recent years is hidden asbestos in the ceiling of a property, which can be highly dangerous if not discovered. Patent or latent defects can be located in the real property itself, land, air or water. They could be environmental, structural, mechanical, electrical, or otherwise. It’s important to inspect the property for all areas where there could be defects prior to buying.
The Due Diligence Period in Residential Real Estate Versus Commercial Real Estate
There is an ancient Latin saying, “Caveat Emptor,” which means “Let the buyer beware.” This saying means that the seller was not obligated to tell the buyer about defects known by the seller. Essentially, this term places all responsibility to inspect a property for potential defects with the prospective buyer.
With regard to residential real estate, this ancient rule no longer applies. As such, a residential real estate purchaser is not necessarily required to inspect a home prior to purchasing. However, as a residential homebuyer, it is still important to inspect a property prior to purchasing to ensure that your property is without defects, which will save you valuable time and money (and not to mention a headache) down the road. For instance, sellers are not obligated to tell you about defects they are not aware of. Thus, if you fail to inspect the property before purchasing, you may discover something the seller didn’t catch, forcing you to try to fix the defect yourself, with your own wallet. There are also cases where a seller may not be entirely truthful about the condition of a property, in the hopes of selling the property faster or for a higher price. Don’t leave your destiny in someone else’s hands by choosing not to have your property inspected prior to purchasing, and make sure to consult a real estate attorney who will look our for your best interests during the due diligence period.
However, the principle of “Let the buyer beware” still applies in Florida to commercial real estate. Furthermore, there are also many more regulations and laws associated with commercial real estate. This is because commercial real estate properties are used to make a profit and thus involve tenants or employees, and so it’s incredibly important that commercial properties be structurally sound and safe for their inhabitants. It is also important to note that while residential real estate purchasers have several consumer protection laws and remedies available to them in case of an undiscovered defect, commercial property purchasers are afforded far less leeway. As such, it is even more important for commercial real property buyers to do their due diligence inspections, and thus equally important for commercial real property purchasers to enlist the help of a seasoned commercial real estate attorney.
The attorneys at The Orlando Law Group represent property owners, prospective property owners, developers, contractors, lenders, investors, real estate agents, brokers, landlords, tenants and more throughout Orlando, Waterford Lakes, Altamonte Springs, Winter Garden, Lake Nona, St. Cloud, Kissimmee, and throughout central Florida.
If you are dealing with a real estate issue or looking for some preventative real estate legal services, please reach out to our office at 407-512-4394, fill out our online contact form.
If you have questions about anything discussed in this article or other legal matters, give our office a call at 407-512-4394 or fill out our online contact form to schedule a consultation. We have an office conveniently located at 12301 Lake Underhill Rd, Suite 213, Orlando, FL 32828, as well as offices in Seminole, Osceola, and West Orange counties to assist you.
Last Updated on February 1, 2023 by The Orlando Law Group