Blank Diligence Addendum PDF Template

1. What is the Due Diligence Period?

   The Due Diligence Period is a timeframe that ends no later than a specified number of business days after the original agreement's effective date. During this period, the buyer has the right to conduct inspections, request repairs, amend the contract, proceed with an "As Is" contract, or terminate the contract under specific conditions.

2. What rights does the buyer have during the Due Diligence Period?

   During the Due Diligence Period, the buyer may conduct or obtain inspections of the property, deliver requests for repairs to the seller, decide to proceed under an amended contract, elect to proceed under an "As Is" contract, or terminate the contract by delivering a Notice of Termination and a Termination Fee to the seller.

3. How can a buyer terminate the contract during the Due Diligence Period?

   To terminate the contract, the buyer needs to provide the seller with both a Notice of Termination and a Termination Fee in good funds. This can be paid directly, through the release of earnest money, or a combination of both. The seller must receive these before the end of the Due Diligence Period for the termination to be effective.

4. What happens to the earnest money if the contract is terminated during the Due Diligence Period?

   If the seller receives the Notice of Termination and the full Termination Fee within the Due Diligence Period, any remaining earnest money is returned to the buyer.

5. What occurs if the buyer does not terminate the contract by the end of the Due Diligence Period?

   If the Notice of Termination and the Termination Fee are not delivered to the seller before the Due Diligence Period ends, the buyer agrees to purchase the property, and the seller agrees to sell it in accordance with the terms of the contract.

6. What does "As Is" mean in the context of this contract?

   When a property is sold "As Is," it means the buyer agrees to purchase the property for the stated purchase price without the seller being required to make any repairs or replacements, except for normal wear, unless agreed upon differently in writing.

7. What actions must occur for the contract to be officially executed?

   The contract is officially executed when both parties, the buyer and seller, along with their witnesses, sign the agreement, thereby agreeing to its terms and conditions.

8. Is there a Termination Fee, and how much is it?

   Yes, there is a Termination Fee that allows the buyer to unilaterally terminate the contract during the Due Diligence Period. The specific amount of the Termination Fee is stated as $ USD in good funds.

9. Are there any restrictions on using the content of the Due Diligence Addendum form?

   The content of the Due Diligence Addendum form is copyrighted by the South Carolina Association of REALTORS® (SCR), and its use is restricted. Unauthorized display, distribution, duplication, transmission, alteration, or reproduction of any part of its content is prohibited without prior written consent from SCR.

Filling out a Diligence Addendum form requires attention to detail and a clear understanding of the process involved. However, people often make mistakes that can impact the real estate transaction. Here are five common errors:

1. Not specifying the due diligence period clearly: It's critical to outline the due diligence period explicitly, stating the number of business days after the original Effective Date. Failure to do so may lead to disputes regarding the timeframe allotted for conducting due diligence.

2. Overlooking to deliver repair requests: Buyers have the right to deliver repairs request notices to the seller during the due diligence period. Neglecting to issue these requests in time can result in the buyer missing the opportunity to address potential issues before proceeding further.

3. Incorrect termination fee details: Providing inaccurate termination fee details or failing to deliver the correct termination fee and Notice of Termination within the due diligence period can invalidate the termination process, forcing the buyer into a contract they may no longer wish to pursue.

4. Misunderstanding the "As Is" agreement: Some buyers do not fully comprehend that proceeding under an "As Is" contract means accepting the property in its current state, without expecting any repairs or changes from the seller. This misunderstanding can lead to dissatisfaction and conflicts post-purchase.

5. Failing to agree in writing to extend the due diligence period: In some cases, both parties may verbally agree to extend the due diligence period but fail to document this agreement in writing. Without written confirmation, the extension may not be legally recognized, potentially leading to disagreements or legal challenges.

Beyond these common mistakes, it's crucial for all parties involved in the transaction to read the entire form carefully and ensure that all agreements and alterations are documented appropriately. Properly completing the Diligence Addendum form protects the interests of both the buyer and seller, facilitating a smoother transaction process.

In real estate transactions, several forms and documents are commonly used alongside the Due Diligence Addendum form. These documents each serve a unique purpose, facilitating an organized, legal, and thorough process for both the buyer and the seller. Understanding the function of each is crucial for a smooth real estate transaction.

• Purchase and Sale Agreement: This is the main contract between the buyer and seller outlining the terms of the real estate sale. It includes the purchase price, property description, and conditions of the sale.
• Property Inspection Report: Conducted by a professional inspector, this report details the condition of the property, highlighting any issues or necessary repairs. It is essential during the due diligence period for the buyer to make informed decisions.
• Title Search Report and Title Insurance: A title search examines public records to verify the seller's right to transfer ownership. Title insurance protects the buyer from future legal claims against the property's ownership. Both are pivotal in ensuring a clear property title.
• Loan Documents: If the buyer is financing the purchase, this comprises all documents related to the mortgage agreement. It includes the loan application, mortgage note, loan estimate, and closing disclosure, detailing the terms of the loan and the buyer's obligations.

Each document plays an integral role in safeguarding the interests of both the buyer and seller during a real estate transaction. By comprehensively understanding and properly utilizing these documents in conjunction with the Due Diligence Addendum form, parties can navigate the complexities of real estate transactions more effectively, ensuring a legally sound and mutually satisfactory outcome.

• Home Inspection Report: Similar to the Due Diligence Addendum, a Home Inspection Report provides detailed information and findings concerning the condition of a property. Both documents serve the purpose of informing the buyer about the property's condition before finalizing a sale, allowing for repairs, amendments, or even termination of the contract based on the findings.

• Contract Amendment: This document shares commonalities with the Diligence Addendum in that it allows for modification of the terms of an original agreement based on new information or conditions, such as the results of due diligence activities. Both documents serve to adjust the initial agreement to reflect current understandings and agreements between parties.

• As-Is Sale Addendum: This document, like the Due Diligence Addendum, details the agreement between buyer and seller regarding the condition of the property at the time of sale, specifically that the buyer accepts the property in its current state. Both documents may direct the sale to proceed under "as is" terms if certain conditions apply or agreements are made during the due diligence period.

• Termination Agreement: Similar to parts of the Due Diligence Addendum that allow for termination of the contract, a Termination Agreement formally ends an agreement between parties under certain conditions. Both documents can dictate terms under which the parties may terminate their agreement, including the allocation or forfeiture of earnest money.

• Property Disclosure Statement: This document, akin to the Due Diligence Addendum, provides important information about the property's condition and history to the buyer. While the Property Disclosure Statement is a preliminary disclosure, the Due Diligence Addendum allows for further investigation and actions based on disclosed or discovered conditions.

• Repair Addendum: This addendum, similar to the Due Diligence Addendum, can specify repairs that the seller must complete before closing, as discovered during inspections or due diligence. Both documents aim to address and rectify issues with the property before the final sale.

• Contingency Removal Form: This form, like the Diligence Addendum, involves the waiver or fulfilment of certain conditions before proceeding to closing. The Due Diligence Addendum allows for the removal of the due diligence contingency if the buyer is satisfied with the property's condition or if certain terms are met.

• Final Walk-Through Checklist: While a Final Walk-Through Checklist is used closer to the closing of the sale to ensure all agreed conditions of the property are met, it serves a similar purpose to the Due Diligence Addendum by allowing the buyer to assess and agree to the condition of the property before finalizing the purchase.

• Escrow Agreement: An Escrow Agreement, similar to the termination aspect of the Due Diligence Addendum, often involves holding funds (such as the Termination Fee or Earnest Money) in trust until certain conditions are met. Both documents outline the handling and disbursement of funds based on the fulfilment of contractual obligations.

• Amendment to Address Concerns With the Property: This specific amendment, like the Diligence Addendum, may be used when either party needs to address issues discovered during the due diligence period. It allows for the sale to proceed under revised terms that account for the cost of repairs or other concerns.

When filling out the Due Diligence Addendum form, especially in the context of buying or selling real estate, it's important to pay close attention to detail and ensure all information is both accurate and complete. Here are some recommended dos and don'ts to guide you through the process:

• Do thoroughly read and understand the Due Diligence Addendum before starting to fill it out. Understanding the terms and conditions is crucial.
• Do accurately fill in all the required information, including the property address, unit number, city, state, zip, county, lot, block, section/phase, and subdivision, as applicable.
• Do specifically note the end date of the Due Diligence Period, taking care not to overlook this critical timeframe for completing your due diligence tasks or terminating the contract if necessary.
• Do keep a copy of the completed form for your records. It's essential to have a personal copy for reference if any disputes or questions arise later.
• Don't rush through the process of filling out the form. Missing or incorrect information can lead to complications or delays in your real estate transaction.
• Don't overlook the importance of delivering any notices, such as the Notice of Termination, within the specified Due Diligence Period. Timing is often critical in these matters.
• Don't ignore the need to consult with a professional, such as a real estate agent or lawyer, if you have any questions or uncertainties. A professional can provide valuable guidance and clarity.
• Don't attempt to alter the form without proper authorization. The South Carolina Association of REALTORS® explicitly prohibits any unauthorized alterations or reproductions of the document.

When navigating the complex world of real estate, the Due Diligence Addendum form is pivotal for both buyers and sellers. However, numerous misconceptions about it can create confusion, thus impeding the smooth facilitation of real estate transactions. The following list debunks some of the common myths surrounding this crucial document.

• Only the buyer has responsibilities. While it's true that the Due Diligence Addendum gives the buyer certain privileges, such as conducting inspections or terminating the contract, it also outlines responsibilities for the seller, including agreeing to sell the property as is unless otherwise amended.

• The due diligence period is fixed. The period for due diligence is not static; it ends no later than a specified number of business days after the effective date but can be extended if both parties agree in writing.

• Terminating the contract is complicated. The process for terminating the contract during the due diligence period is relatively straightforward – by delivering a Notice of Termination and a Termination Fee to the seller.

• A termination fee is always required. While a termination fee is typically required, its fulfillment can come through direct payment, release of an appropriate amount of earnest money, or a combination thereof.

• After the due diligence period, the buyer cannot back out. If the buyer does not deliver the Notice of Termination and all of the termination fee before the end of the due diligence period, they are agreeing to purchase the property. However, up until that point, they have the ability to back out as per the terms discussed.

• The form only outlines penalties for the buyer. The Due Diligence Addendum does establish the buyer’s right to terminate the contract, but it also ensures that if they follow through with the purchase, the seller must sell the property as agreed, thus it binds both parties to their respective obligations.

• Buyers must accept the property in any condition after due diligence. This statement is misleading. The due diligence period allows the buyer to inspect the property and request repairs. After this period, unless specifically amended, the buyer agrees to purchase the property 'as is'.

• Inspections are obligatory. The Due Diligence Addendum allows the buyer to conduct inspections but does not obligate them. The decision to conduct inspections lies with the buyer.

• The contract is only valid in South Carolina. While the form is copyrighted by the South Carolina Association of REALTORS®, the principles of due diligence apply broadly across many jurisdictions. However, local laws and forms may vary, emphasizing the importance of understanding regional real estate laws.

Understanding the Due Diligence Addendum form clarifies the rights and obligations of both parties, ensuring a more transparent and fair transaction process. Clearing up misconceptions helps buyers and sellers alike navigate their roles and responsibilities more effectively, leading to smoother real estate transactions.

When engaging in a real estate transaction, it's vital to understand the intricacies of the Diligence Addendum form. This document plays a pivotal role in outlining the terms of due diligence, a phase allowing the buyer to thoroughly inspect the property and decide on proceeding with the purchase. Here are five key takeaways about filling out and using the Diligence Addendum form effectively:

• The Diligence Addendum sets a clear timeframe for the due diligence period, which is essential for conducting necessary inspections and evaluations of the property. This period is strictly business days following the original Effective Date, with opportunities for extension only through mutual written agreement by both parties.
• During the due diligence period, the form empowers the buyer with several options, including conducting or obtaining inspections, delivering repair requests to the seller, proceeding with an amended contract, continuing under an "As Is" contract, or terminating the contract altogether.
• Termination of the contract during the due diligence period is a critical feature of the Diligence Addendum. It allows the buyer to unilaterally terminate the contract by delivering a Notice of Termination and a Termination Fee to the seller. This process involves specific financial transactions, including the payment of the termination fee through direct payment, earnest money release, or a combination of both.
• If the buyer does not take the step to terminate the contract by the end of the due diligence period, they are automatically agreeing to purchase the property under the terms outlined in the contract. This emphasizes the importance of timely decisions and actions during the due diligence period.
• In instances where the buyer fails to amend the contract or decides not to terminate it, the agreement defaults to an "As Is" purchase. This means the buyer agrees to buy the property in its current condition at the time of sale, with the seller only obligated to maintain the property through to closing, subjected to normal wear and tear without the responsibility for repairs or replacements.

Understanding these key aspects of the Diligence Addendum form enables buyers and sellers to navigate the complexities of real estate transactions with more confidence. It’s crucial for parties involved to pay close attention to these details to ensure a smooth and aware progression of the buying or selling process.