Due Diligence, Simplified

The Georgia Association of Realtors (GAR), led by legal counsel Seth Weissman of Weissman, Nowack, Curry & Wilco, provides the forms used in the overwhelming majority of real estate transaction in Georgia. In particular, the standard Purchase and Sale Agreement contains a ‘due diligence’ paragraph which is often misunderstood by buyers and sellers alike. In truth, it’s very simple and tends to facilitate a smooth transaction for all parties.

As with most legal documents, the GAR Purchase and Sale Agreement has evolved over time. Prior versions attempted to assign some responsibilities to the buyer (i.e. home inspection, loan acquisition, etc) while assigning others (termite clearance, septic system certification, boundary marking, etc) to the seller. This sometimes resulted in misunderstandings between the parties, with important milestones going unmet or being performed hurriedly, just prior to closing.


The current Purchase and Sale Agreement largely solves this problem by establishing a negotiated ‘due diligence period’. During this period, the buyer accepts responsibility for performing any and all inspections, investigations, surveys, etc, as he/she sees fit. Further, this period is used by the buyer to determine his/her ability to obtain a mortgage loan. During the due diligence period, the buyer can negotiate identified deficiencies with the seller, determine boundaries through a survey, determine the presence of termites or other wood destroying organisms. If the buyer and seller are unable to reach a resolution of these issues, or if the buyer learns that he/she cannot obtain the necessary mortgage loan, the buyer may unilaterally declare the Agreement null and void, and receive full return of previously-tendered earnest money. At the end of the due diligence period, however, this right ends and the seller can reasonably expect that the buyer will now proceed to closing. Should the buyer fail to do so, his/her earnest money will normally be forfeited.

That’s it. No mystery, no smoke-and-mirrors. While there has always been a degree of intimidation contained in Caveat Emptor (Let the buyer beware), this paragraph provides the buyer a reasonable period of time to learn all that he/she can about the property and to then exercise (or not exercise) the unilateral right to withdraw.

Consumers in Georgia who elect to engage the services of a Realtor can be assured that they will navigate the due-diligence period with minimal difficulty, thus resulting in a higher likelihood of closing. And, after all, isn’t that what all parties want?