Once the terms of the letter of intent are agreed to and signed off on by both parties, you will have determined how many days to give the attorneys to prepare an acceptable purchase agreement. I usually ask my clients to have their attorneys prepare the purchase agreement, because then it is written to protect your needs.
As you can see, there are so many items that have to be tracked that putting everything together on a paper calendar to look at all the time can be very helpful. You might notice that one item had to be completed before another, and, therefore, there wasn’t enough time to complete the due diligence. Be aware that if your due diligence falls around any holiday, you’ll need to extend the dates. For instance, if the buyer has 5 days to complete a physical inspection from December 23rd, you probably won’t get an inspector to come by during that week. Extend this to 7 business days or 10 days. I usually add all of these due dates to my calendar so that I don’t miss anything.
The items that often take longer than expected are the following: mortgage approval, zoning approval, and environmental reports. I request the ability to send a notice to extend these timelines in the original letter of intent/purchase agreement. If you don’t do this, you will be writing up many addendums to your purchase agreement. Your attorney will happily do this for you, but it will cost you more money than necessary.