Question

What is the purpose of the buyer's and the seller's performing due diligence?

Answer 1

Due diligence is the process of all sorts of investigation before entering into a contract. This is done by both buyer and seller. The main purpose of such investigation is to avoid unnecessary complication once the contract is made; such complication may be legal, ethical, or financial. Both sellers and buyers should do due diligence for their safety.

Example: A property is sold and the contract is made. Latter it is disclosed that the seller did not have clear ownership rights. Due diligence was not done by the buyer and he is in legal complication now.