Glossary

Due Diligence Period

Also known as: inspection period, study period

The negotiated window after PSA execution during which the buyer investigates the property's physical condition, title, leases, and financials, and may terminate the contract for any or a specified reason with the deposit refunded.

The length of the due diligence period is one of the most heavily negotiated PSA terms — sellers push for a short window to reduce market exposure and buyer optionality, while buyers want enough time to complete third-party reports, underwrite the rent roll and financials, and secure financing. Some PSAs structure due diligence as a true free look, termination for any reason with no explanation required, while others limit termination rights to specific, disclosed issues discovered during the period, shifting more risk to the buyer. Extensions are common and are typically negotiated in exchange for an additional deposit increment, converting more of the buyer's money to non-refundable as an incentive to keep the deal on track.