The due diligence period on a commercial purchase, and what fits inside it
There is no fixed statutory length for a commercial due diligence period in New Zealand. The standard ADLS/REINZ agreement, now published with The Law Association of New Zealand (TLANZ), does not include a due diligence condition at all; it is a Further Term your lawyer drafts for the deal. In practice, commercial due diligence periods commonly run 10 to 15 working days, and longer where a seismic assessment or a contamination investigation is likely.
What counts as a working day
The standard agreement's own definition of "working day" excludes weekends, the named public holidays, and 24 December to 5 January inclusive, running to 15 January for the LIM date specifically. The council's own LIM turnaround runs on a different definition, under the Local Government Official Information and Meetings Act, which excludes weekends, holidays and 20 December to 10 January. If your due diligence date sits near either window, check which definition your Further Term actually uses, because the two are not the same.
How the standard conditions actually operate, and why it matters for a Further Term
The standard conditions in the agreement, finance, LIM, building report, toxicology and OIA or Land Act consent, work in a specific way: each is deemed not fulfilled until one party serves notice of fulfilment on the other, time for fulfilment is of the essence, and if a condition is not fulfilled or waived by its date, either party may cancel by notice and the deposit is returned.
A general due diligence Further Term is not one of those clauses, so it only works the same way if it is drafted to. Ask your lawyer to confirm your Further Term states plainly what happens if nobody serves notice by the due diligence date, and that a condition is deemed not fulfilled until notice is served. A date simply passing, with silence on both sides, is not the same as the sale being unconditional.
Lead times against a 10 or 15 working-day period
LIM: the council has up to 10 working days once you apply.
Council property file: up to 10 working days standard, 3 urgent, in Auckland.
Site contamination enquiry, if the land could be a HAIL site: up to 10 working days standard, 3 urgent, in Auckland.
An initial seismic assessment or an asbestos survey: depends entirely on the specialist's availability. We found no published standard turnaround, so book early, and allow longer again for a full detailed seismic assessment.
A building inspection or technical due diligence report: likewise depends on the inspector's availability. Book it as soon as the records give you a reason to.
Ten working days is tight if you need to commission any specialist report off the back of what the LIM or property file shows. Fifteen gives you time to read those records first and then commission only the expert reports they actually justify, which is both cheaper and faster than booking everything up front.
The further terms in a commercial agreement are individually drafted, and it is worth reading them together with the standard conditions rather than in isolation; our note on special conditions in a building contract covers the same drafting discipline on the construction side. If your purchase is also being funded against a construction budget, see how a QS report supports a bank construction loan.
What this doesn't tell you
This explains how the standard conditions work so you can ask the right questions. It is not advice on drafting your own Further Term; that is your lawyer's job.
The lead times above are typical, not guaranteed. A specialist may be booked out.
"Working day" definitions differ between the agreement and council processes; confirm which applies to which date in your contract.
FAQ
Does a due diligence period include weekends and public holidays in NZ?
Under the standard agreement's own definition, no. "Working day" excludes weekends, the named public holidays, and the period from 24 December to 5 January (to 15 January for the LIM date). Check whether your due diligence Further Term uses that same definition or its own.
Is 10 working days enough for a commercial building?
It can be tight. A LIM alone can take up to 10 working days, which leaves little room to commission a seismic, asbestos or contamination report off the back of what it shows. Fifteen working days is a more comfortable minimum for anything beyond a straightforward small unit.
Can I extend the due diligence period, and what does the vendor usually want in return?
Extensions are a matter of negotiation between the parties, usually through their lawyers. There is no standard entitlement to one.
Does due diligence cover finance, or do I need a separate finance condition?
The standard agreement has a separate finance condition (clause 9.1). A due diligence Further Term is usually about the physical, legal and compliance state of the property, not your finance, unless it is specifically drafted to include it. Confirm with your lawyer which condition covers what.
What happens when the due diligence date passes without notice?
Under how the standard conditions operate, a condition is deemed not fulfilled until notice of fulfilment is served. A Further Term should be drafted the same way, so that silence does not accidentally make the sale unconditional. Confirm this is how yours is written.
What if I find a problem on day 9 of a 10-day period?
Raise it with your lawyer immediately. Depending on how your Further Term is drafted, you may be able to give notice that the condition is not satisfied, or you may need to ask the vendor for an extension to investigate further. This is exactly the situation a longer period, or an earlier start on the desk-based checks, is meant to avoid.
Get the timeline checked against your records
If you are negotiating a due diligence period, or you are partway through one and want an independent read of the title, LIM or property file against the time you have left, send it through. Independent analyst, not a valuer, engineer, surveyor, building inspector or lawyer.
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