What is “Due Diligence / All Appropriate Inquiry”?
In the context of Real Estate transactions, due diligence is the level of prudent inquiry that is proper and ordinarily exercised by a reasonable and prudent person under the particular circumstances.
For example, verifying the legal chain of title and ownership of the property; inquiring about the environmental conditions of the property; identifying zoning restrictions; determining the status of tax payments on the property; and other inquiries which are relevant to the particular real estate transaction constitute “due diligence”.
Environmental Site Assessments are types of “due diligence” known as “All Appropriate Inquiries” which are required in industrial and commercial transactions. You may only be protected from liability for contaminated property that you buy or lease if you conducted “all appropriate inquiries” before you purchase or lease the property.
Due diligence is the necessary inquiry to ensure that you acquire property which not only meets your expectations, but which can be used as you intend to use it, is properly valued, and does not trigger liability for unsafe conditions which you did not create.