Free Diligence Addendum Form in PDF

Instructions on Writing Diligence Addendum

Filling out the Diligence Addendum form is a critical step in the real estate transaction process. It outlines the responsibilities and rights of both the buyer and the seller during the due diligence period. This document helps ensure that each party is clear on what can be done during this time, including inspections, repairs, and the conditions under which the contract can be amended or terminated. Following these steps carefully will help in accurately completing the form and moving forward effectively in the transaction process.

1. Start by entering the full property address, including the Address, Unit #, City, SC, Zip, County, Lot, Block, Section/Phase, and Subdivision in the designated fields at the top of the form.
2. Specify the end date of the DUE DILIGENCE PERIOD, which is the number of business days after the original Effective Date. This is calculated unless an extension is agreed upon in writing by both parties.
3. Understand that during the Due Diligence Period, the seller gives the buyer the right to:
   • Conduct or obtain inspections.
   • Deliver Repairs Request(s) Notice to the Seller.
   • Proceed under an amended Contract.
   • Proceed under an As Is Contract.
   • Terminate the Contract by delivering a "Notice of Termination" and a "Termination Fee" to the Seller.
4. Review the section on TERMINATION carefully. It outlines how the buyer can unilaterally terminate this contract by delivering both a Notice of Termination and a Termination Fee to the seller within the Due Diligence Period. Enter the Termination Fee amount in US Dollars (USD) and specify the form of payment.
5. If the buyer decides not to terminate the contract before the end of the Due Diligence Period, it is agreed that the buyer will purchase and the seller will sell the property in accordance with the contract.
6. For transactions where no new or amended contract is reached and the buyer does not terminate the contract, note that the buyer agrees to buy, and the seller agrees to sell the property "As Is."
7. Both parties must sign and date the form in the provided spaces for BUYER and SELLER, along with the witness signatures, dates, and times to legally execute the document.
8. Finally, both the buyer and seller should check the appropriate boxes at the bottom of the form to acknowledge having read the page.

Once the Diligence Addendum form is accurately filled out and signed by all parties, it becomes a part of the official real estate transaction documents. The next steps include continuing with the due diligence activities as outlined, adhering to the agreed terms, and moving towards closing the transaction. Keeping a copy of this document for your records is advised. Remember, this form, like all real estate transaction documents, plays a crucial role in protecting your interests and ensuring a clear understanding between all parties involved.

What is a Due Diligence Period in a real estate contract?

The Due Diligence Period is a designated timeframe agreed upon by the buyer and seller within a real estate transaction, starting from the original effective date of the contract. During this period, the buyer has the right to conduct various inspections and assessments of the property, obtain necessary reports, and decide on proceeding with the purchase based on the findings. This phase allows the buyer to thoroughly evaluate the property and its condition before finalizing the purchase decision.

What actions can a buyer take during the Due Diligence Period?

During the Due Diligence Period, a buyer may engage in several activities to assess the property's condition and compliance with their expectations and requirements. These actions include conducting or obtaining inspections of the property, delivering repair requests to the seller, deciding to proceed under an amended contract if necessary, moving forward with the transaction under an "As Is" contract, or opting to terminate the contract by delivering a "Notice of Termination" and a "Termination Fee" to the seller.

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

To unilaterally terminate the contract during the Due Diligence Period, the buyer must deliver both a Notice of Termination and a Termination Fee in good funds to the seller. This termination fee can be paid directly, released from the earnest money with the seller's agreement, or a combination of both. Upon the seller's receipt of the Notice of Termination and the full termination fee within the due diligence period, any remaining earnest money will be returned to the buyer. This provision ensures that the buyer can exit the agreement under clear terms if they choose not to proceed with the purchase.

What happens if the buyer does not terminate the contract during the Due Diligence Period?

If the buyer does not deliver a Notice of Termination and the required termination fee to the seller before the end of the Due Diligence Period, the buyer is obligated to proceed with purchasing the property according to the terms specified in the contract. This stipulation binds the buyer to complete the purchase unless a new or amended contract is agreed upon within the period. This ensures both parties are clear on the implications of not terminating the contract within the agreed timeframe.

What does "As Is" mean in this context?

In the context of this real estate transaction, "As Is" signifies that the buyer agrees to purchase the property at the agreed purchase price, accepting the current state of the property from the effective date through the closing of the transaction. This means the seller will not be responsible for any repairs or replacements other than normal wear and tear maintenance. Both parties must agree in writing to any deviations from this agreement. This clause ensures that the buyer is fully aware that no further modifications or improvements will be made by the seller before the sale is finalized.

One common mistake made when filling out the Diligence Addendum form is not providing the complete and accurate property information, including the address, unit number, city, ZIP code, county, lot, block, section/phase, and subdivision. This lack of attention to detail can cause confusion and potential legal issues in the agreement process.

Another error is failing to clearly specify the due diligence period's end date. This period is crucial as it dictates the timeframe within which the buyer must conduct all necessary inspections, review, and possibly renegotiate terms. Unclear deadlines can lead to disputes and complications in the transaction.

Individuals often overlook the importance of properly indicating which actions the buyer intends to take during the due diligence period, whether it be conducting inspections, delivering repair requests, proceeding under an amended contract, proceeding under an 'As Is' contract, or terminating the contract. This oversight can lead to misunderstandings between the parties involved.

There's also the mistake of not correctly documenting the delivery of the Notice of Termination and the Termination Fee to the seller during the due diligence period. Proper execution of these steps is essential for the unilateral termination of the contract by the buyer. Failure to accurately execute these steps can result in the loss of the termination right.

Incorrectly calculating or failing to provide the Termination Fee in good funds is another prevalent error. The specific amount and form of this fee must be clearly detailed to ensure compliance with the agreement. Ambiguity or inaccuracy here could impede the contract's termination process.

Some parties omit signing the form, which is a critical final step in validating the document. An unsigned addendum may not be legally binding, rendering the due diligence terms unenforceable.

Not adhering to the stipulation that if the buyer chooses not to terminate the contract within the due diligence period, they agree to purchase the property 'As Is' can also be problematic. This misunderstanding or omission can lead to legal disputes over property conditions at closing.

Failing to recognize that the contract stipulates the property is to be maintained from the effective date through closing subject to normal wear, without repair or replacement, unless otherwise agreed, can lead to misconceptions about the seller's responsibilities. This misunderstanding can cause disagreements and potential deal breakdowns.

Lastly, the mistake of not understanding the copyright disclaimer and the proper use of the form can result in unauthorized use of protected content. It is critical to respect copyright laws and the conditions set by the South Carolina Association of REALTORS® to avoid legal actions.

When navigating the complexities of real estate transactions, several forms and documents complement the Due Diligence Addendum to ensure a comprehensive understanding and agreement between the parties involved. These documents play a vital role in providing clarity, setting expectations, and protecting the interests of both buyers and sellers throughout the process.

• Agreement to Buy and Sell Real Estate: This foundational document outlines the basic terms of the real estate transaction, including the purchase price, property description, and closing details. It serves as the primary contract to which the Due Diligence Addendum is attached.
• Inspection Reports: Generated after a buyer opts to conduct property inspections during the due diligence period, these reports detail the condition of the property, highlighting any issues or potential concerns. Inspection reports can cover various aspects, including structural integrity, pest infestations, and systems functionality (electrical, plumbing, HVAC).
• Repairs Request Notice: If inspections reveal problems, a buyer may issue this document to the seller, requesting repairs or improvements before proceeding with the purchase. It lists the specific issues found and suggested actions to remedy them.
• Notice of Termination: Should the buyer decide to withdraw from the agreement within the due diligence period, this notice formally terminates the contract. It must be delivered along with the Termination Fee as outlined in the Due Diligence Addendum.
• Amendment to Agreement: If the buyer and seller agree to modify terms of the original Agreement to Buy and Sell Real Estate (e.g., adjusting the sale price, changing the closing date, or accommodating agreed-upon repairs), this document formalizes those changes.
• Earnest Money Receipt: This receipt acknowledges the buyer's earnest money deposit, a show of good faith towards purchasing the property. It may detail conditions under which the deposit can be returned to the buyer or forfeited to the seller, especially relevant if the contract is terminated during the due diligence period.

Each of these documents interplays with the Due Diligence Addendum to provide a structured, transparent framework for real estate transactions. By carefully preparing and reviewing these forms, all parties can navigate the purchasing process with a greater sense of security and mutual understanding.

The Disclosure Statement is a document that bears a resemblance to the Diligence Addendum form, primarily because it also plays a pivotal role in real estate transactions. This document is designed to inform the buyer about the condition of the property, detailing existing issues or potential problems that have been known by the seller. Much like the Due Diligence Addendum, which allows buyers to inspect the property and request repairs, the Disclosure Statement provides essential information to the buyer, enabling them to make an informed decision about proceeding with the purchase.

The Purchase Agreement is another document closely related to the Diligence Addendum form. It outlines the terms and conditions under which the property is sold, including the purchase price, closing date, and contingencies such as the due diligence period mentioned in the Diligence Addendum. Both documents work in tandem to ensure that the buyer can assess the property thoroughly before finalizing the purchase, offering mechanisms for backing out of the deal should substantial issues arise during the due diligence period.

An Inspection Report shares similarities with the Diligence Addendum, focusing on the examination of the property's condition. Generated by a professional inspector, this report provides detailed findings about the property's state, including structural, electrical, and plumbing systems. It complements the Due Diligence Addendum by offering the buyer in-depth insights that can inform their decision to submit a Repair Request Notice or proceed with the purchase "As Is," as stipulated in the addendum.

The Escrow Agreement is akin to the Diligence Addendum, especially in its handling of earnest money. This legal document outlines the terms under which a third party, the escrow agent, holds funds on behalf of the buyer and seller during the transaction. Similar to the provisions for the Termination Fee in the Due Diligence Addendum, the Escrow Agreement ensures that earnest money is properly managed and disbursed according to the agreement's terms, including returning funds to the buyer if the contract is terminated within the due diligence period.

Lastly, the Contingency Removal Form closely parallels the Diligence Addendum. Contingencies in real estate contracts are conditions that must be met for the transaction to proceed. The Due Diligence Addendum itself can be considered a type of contingency, allowing the buyer to investigate the property and potentially terminate the contract. The Contingency Removal Form is used to officially remove such conditions, signifying the buyer's intent to move forward with the purchase, akin to the buyer deciding not to terminate the contract pursuant to the terms of the Due Diligence Addendum.

When filling out the Diligence Addendum form, particularly in the context of buying and selling real estate, it is crucial to approach the task with a detailed and mindful strategy. Below are lists of recommended dos and don'ts to ensure the process promotes clarity, compliance, and mutual understanding between all parties involved.

Things you should do:

• Review the original Agreement to Buy and Sell Real Estate thoroughly before filling out the Diligence Addendum to ensure understanding of the context and commitments previously agreed upon.
• Clearly specify the Due Diligence Period, including the exact number of business days after the original Effective Date, and obtain written agreement from all parties if there's an extension.
• Document any inspections, repair requests, amendments to the contract, or decisions to proceed under an As Is Contract within the Due Diligence Period to maintain transparency and accountability.
• Deliver the Notice of Termination and Termination Fee within the Due Diligence Period if the decision is made to terminate the contract. This ensures that obligations are met and minimizes potential disputes.
• Communicate effectively with all parties involved, including the seller, real estate agents, and legal representatives, to ensure understanding and agreement on all terms detailed in the Due Diligence Addendum.
• Consult with a legal professional familiar with real estate contracts to review the Diligence Addendum before and after completion to ensure compliance with local laws and regulations.

Things you shouldn't do:

• Ignore the terms of the original Agreement to Buy and Sell Real Estate. Every term agreed upon previously affects the conditions and clauses in the Diligence Addendum.
• Leave any sections of the Diligence Addendum blank or incomplete, as this can lead to misunderstandings or legal vulnerabilities later in the transaction process.
• Miss the deadlines specified for the Due Diligence Period. Not adhering to these timeframes can forfeit rights or options detailed in the Addendum.
• Forget to deliver the necessary documents or fees to the Seller as specified for the termination of the contract. This oversight can result in the failure to effectively terminate the agreement.
• Underestimate the importance of written agreements for any amendments or extensions to the timeline. Verbal agreements can lead to disputes and are harder to enforce legally.
• Use the form without authorization, especially if it involves reproducing, displaying, or altering the form without written consent from the South Carolina Association of REALTORS®. Respecting copyright laws is essential.

When dealing with the Due Diligence Addendum in a real estate transaction, it's imperative to have a clear understanding to navigate the process effectively. Several misconceptions frequently arise, leading to confusion and misunderstanding about its purpose and provisions. Here are ten common misconceptions:

1. Any inspection or repair request extends the due diligence period automatically. This is false. The due diligence period is set and ends no later than a specified number of business days after the original effective date unless both parties agree in writing to extend it.

2. The buyer is obligated to proceed with the purchase if they do not terminate the contract during the due diligence period. Indeed, if the buyer does not deliver a notice of termination and the termination fee before the end of the due diligence period, they are agreeing to purchase the property.

3. Termination of the contract requires the seller's approval. During the due diligence period, the buyer has the unilateral right to terminate the contract by delivering both a Notice of Termination and a Termination Fee to the seller. Seller's approval is not required.

4. The termination fee is always a fixed amount. The termination fee is specified in the contract, but its form can vary—it can be paid by releasing an appropriate amount of earnest money, by payment, or by a combination thereof.

5. The entire earnest money is forfeited upon termination. Only the specified termination fee is forfeited. Any remaining earnest money must be returned to the buyer if the contract is terminated during the due diligence period.

6. After the due diligence period, the buyer cannot request repairs. The buyer may request repairs during the due diligence period. It's important to understand that the buyer's leverage for requesting repairs diminishes after this period ends.

7. "As Is" means the seller is not responsible for any property condition. While buying "As Is" means the seller will not repair or replace anything, it doesn’t mean the seller is absolved of all responsibility. The property should still be in the condition as stated in the contract, subject to normal wear.

8. The Due Diligence Addendum is optional in a real estate transaction. In many cases, including a due diligence period is standard practice and beneficial for both parties, but specific contract terms need to be agreed upon by both the buyer and seller. It's not automatically included without agreement.

9. The seller cannot refuse to sell after receiving the termination notice. If the buyer properly executes their right to terminate by delivering the notice and fee within the due diligence period, the seller must comply, and the contract is terminated.

10. The addendum limits the buyer to only those actions listed. While the addendum outlines specific actions a buyer may take (e.g., conducting inspections, delivering repair requests), it's designed to protect the buyer's right to thoroughly investigate the property and not to limit their actions to only those enumerated.

Understanding these points ensures both buyers and sellers are better prepared to navigate the complexities of real estate transactions with a Due Diligence Addendum. Clear communication and professional advice are key to leveraging its provisions effectively.

When dealing with a Due Diligence Addendum in a real estate transaction, there are several key points to keep in mind to ensure the process goes smoothly for both the buyer and the seller. Here are the takeaways:

• Clear Definition of the Due Diligence Period: This form outlines a specific timeframe after the effective date of the contract, known as the Due Diligence Period, during which the buyer has various rights. It is imperative that both parties are aware of when this period ends, as actions taken during this time can significantly affect the transaction.
• Buyer's Rights During Due Diligence: The buyer is granted several rights during the Due Diligence Period, including conducting inspections, delivering repair requests to the seller, proceeding under an amended or as-is contract, and the ability to terminate the contract. These rights allow the buyer to thoroughly assess the property and make informed decisions.
• Termination Clause: One of the critical aspects of the Due Diligence Addendum is the buyer's unilateral right to terminate the contract by delivering a Notice of Termination and a Termination Fee to the seller within the Due Diligence Period. This clause provides a safety net for buyers, allowing them an out should they find the property unsatisfactory for any reason.
• "As Is" Purchase Agreement: Should the buyer fail to renegotiate the contract or exercise their right to terminate, they agree to purchase the property "as is." This means accepting the property in its current condition, with the seller only responsible for maintaining the property through closing without any obligation for repair or replacement, unless otherwise agreed upon in writing.

Understanding each of these elements is vital for both parties involved in a real estate transaction to ensure their rights and obligations are clearly defined and protected throughout the process.