Using a Due Diligence Clause When Buying Off the Plans
- Ryan Smith
- Aug 11, 2022
- 3 min read
Updated: Jun 25
Due Diligence can be seen as your “get out of jail free” card when used wisely.
Buying a property off the plans can be intimidating, especially if you’re a first-time investor staring down the barrel of a long, legally binding contract with a property developer.
The good news? You’re not flying blind.
There are tools built into most agreements that give you the ability to slow things down, do your homework, and make sure the deal stacks up.
One of the most powerful tools in your kit is the Due Diligence Clause.
What is a Due Diligence Clause?
In plain English: it’s your safety net.
A due diligence clause allows you to sign a contract and place the property “under offer,” without being locked into the purchase. You are essentially reserving the first right of refusal for the property.
You can walk away from the deal during the due diligence period (usually 10 working days), and in many cases, you don’t even need to give a reason.
Think of it as pressing pause. You secure the opportunity, but you still have time to validate everything behind the scenes - pricing, developer track record, rental yields, market conditions, and even renegotiate aspects of the deal.
It’s typically found in the Further Terms section of an off-the-plan Sales & Purchase Agreement.
Here's an example of a typical due diligence clause that would be in an off-the-plan contract:
Here’s What Happens During Due Diligence
Once you’ve signed the contract and activated the due diligence clause:
You work with your lawyer to comb through the agreement. They’ll flag red flags, negotiate improvements, and make sure you're not exposed to unnecessary risk.
You review the financials: estimated yields, residence association fees, build timeline, and resale outlook.
You might even negotiate perks - cashbacks, furniture packs, or pricing tweaks - especially if you spot leverage points during your research.
And if something doesn’t stack up? You can exit, no harm done.
Although most due diligence periods last for 10 working days, some might be shorter, and some might be longer. If you need more time to finalise everything, you can request an extension from the developer.
Why Legal Advice Is Crucial
Don’t assume your family lawyer who helped you with your home purchase can handle this.
Off-the-plan contracts are a different beast entirely. You want a solicitor who understands property development, sunset clauses, variations, and all the fine print buried in the Further Terms.
We work with a network of highly experienced lawyers who specialise in this area. We’re happy to refer you to one that suits your situation.
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We start with a Discovery Meeting where we learn about you, your goals, etc. and you learn more about us.
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