09/05/2025
💡 Contract Tip: Don’t Underestimate the Power of a Well-Drafted Due Diligence Clause
We’re seeing more savvy purchasers and developers leverage Due Diligence provisions as a powerful tool — not just in site acquisitions, but across development sites, strata-titled properties, and acquisitions involving body corporate interests.
When properly drafted, a Due Diligence clause isn’t just a safety net — it’s a strategic advantage. It gives buyers the time and flexibility to investigate key commercial, planning, legal, and operational risks before they’re locked in.
But not all DD clauses are created equal. The nuances matter — and poorly scoped clauses can leave buyers exposed or without real exit rights.
Here are key factors to consider when negotiating a Due Diligence provision:
✔️ Scope of Due Diligence
– Does it cover title, zoning, contamination, approvals, feasibility, and body corporate records?
✔️ Access Rights
– Are you entitled to enter the property during the DD period?
– If so, under what conditions? Is notice required? Are there restrictions on time, frequency, or areas?
– Will you be conducting testing, surveying, or minor works (e.g. core sampling, invasive inspections)? If so:
(i) Is the seller’s consent required – and is it provided subject to terms?
(ii) Does the seller need to accompany you during periods of access?
(iii) Are you obliged to make good any damage, and to what standard?
(iv) Is access entirely at your own risk, and is there an indemnity in place?
✔️ Authority to Liaise with Authorities and Service Providers
– Many councils, utility providers, and other authorities won’t engage without the seller’s signed authority.
– Does the contract require the seller to cooperate and provide signed forms or letters on request?
– If seller assistance is required, are they entitled to pass on any associated costs?
✔️ Termination Rights
– Is the termination right entirely discretionary, or limited to material issues or “reasonable grounds”?
✔️ Timing & Triggers
– When does the DD period start — on Contract ex*****on, on access being granted, or on delivery of key information?
✔️ Disclosure & Transparency
– Is the seller obliged to disclose key documents, outstanding notices or known issues that may affect the property?
– is the obligation to disclose only as at the Contract Date or does it continue to Settlement?
Due Diligence clauses are far more than standard boilerplate — when tailored properly, they’re one of the most valuable tools in any property contract. They offer flexibility, leverage, and, critically, protection when the commercial picture shifts.
If you're looking to better understand or negotiate Due Diligence provisions in your next transaction, reach out to the team at Arena Law — we’re here to help navigate the detail and deliver clear, commercial solutions.
