A few years ago I purchased an office building from an older seasoned commercial real estate developer. This developer had a long relationship with an older experienced retired commercial real estate attorney who represented him in our transaction.
Our purchase and sale contract was similar to most with 90 days of due diligence and 30 days after the end of due diligence to close. After only 70 days of due diligence I was in a position to close and I asked my attorney (I always hire counsel to represent my interests in every transaction and I never act as my own attorney) to contact Seller’s counsel and close on a specific date that happened to fall on day 80 of our 90 day due diligence period. My attorney got back to me and stated that the date selected for closing was fine with Seller – but, in order to schedule the closing for that date Seller demanded that we waive the balance of our 90 day due diligence period prior to agreeing to the closing date. As the buyer of more than 50 CRE investments I had never encountered such a request from a Seller before but I agreed to the demand and understood the Seller’s position.
In fact, I always strive to close deals during my due diligence period. Most Sellers are pleasantly surprised by the faster than expected close and their attorneys rarely request the termination of due diligence. The advantage of closing during due diligence is that it provides a safety valve for buyers if something goes wrong at closing or if a dispute arises. In these instances, seller’s counsel will not be able to take the position that buyer’s failure to close is an event of default pursuant to the contract terms since buyer is still within their due diligence period. Closings usually move forward without any problem but small advantages can sometimes end of being a
big help.