Due diligence clause NZ: what it covers and how it fits with finance

Last reviewed: 25 September 2026. This is general information. Your lawyer should word and check any condition before you sign.

Short answer

A due diligence clause is a condition in your sale and purchase agreement that gives you a set number of working days to investigate the property. If you’re not satisfied with what you find, you can usually cancel the agreement and get your deposit back. It’s one of the broadest protections a buyer can ask for, which is why sellers don’t always like it.

What a due diligence clause covers

A standard finance condition or building report condition only covers one thing. A due diligence clause is wider. Depending on how your lawyer words it, it can let you look into the building, the title, the LIM, council records, insurance, the body corporate, and anything else that affects whether you want to go ahead.

That width is the point. If the builder’s report is fine but the insurer won’t cover the house, or the LIM shows unconsented work, you still have a way out.

How long should it be?

There’s no fixed rule. The number of working days is whatever you and the seller agree. Think about how long each check really takes: getting a builder out, ordering the LIM from council, getting an insurance quote and, if it’s a unit, reading the body corporate minutes. Council LIM turnaround times vary a lot, so ask your council what it’s quoting before you settle on a date.

Your finance condition is usually separate. Make sure both dates give you enough room, because the bank will often want to see the valuation and sometimes the building report before it confirms your loan.

How it fits with finance

This is the part I spend most time on with clients. The bank’s approval is often “subject to” things like a registered valuation, a satisfactory building report, or for a unit, the body corporate documents. If those take longer than your finance date, you can end up having to go unconditional on finance before you know the house is sound.

A good sequence is to get your pre-approval sorted before you make offers, then order the valuation and building report as soon as your offer is accepted. I’ve written more on the timing in your offer got accepted: what happens now.

Will a seller accept it?

Sometimes not. In a busy market, or with several offers on the table, a seller may prefer an offer with fewer conditions or a shorter timeframe. That doesn’t mean you should drop protections you need. You can do some checks before you offer, such as reading the LIM or a pre-purchase report the agent has, and keep the conditions you can’t cover in advance. At auction you can’t have any conditions at all, so every check has to happen first. See auction, tender or multi-offer.

Frequently asked questions

Can I cancel for any reason under a due diligence clause?

It depends on the wording. Some clauses let you cancel if you’re not satisfied for any reason, others are narrower. Your lawyer will explain exactly what yours allows before you sign.

Do I lose my deposit if I pull out?

If you cancel properly under a condition, before its date, you usually get your deposit back. Pulling out after you’ve gone unconditional is a different story and can be very expensive.

Is a building report enough on its own?

It covers the physical house. It won’t tell you about title issues, unconsented work on the council file or insurance problems. That’s why a broader due diligence clause, or separate LIM and title conditions, are worth having.

For more on the rules around buying, the government’s settled.govt.nz is a good independent guide. If you want to line up finance before you start making offers, book a free chat.

This article is general information only and isn’t legal or personalised financial advice. Mortgage Sense is a trading name of Yatin Kainth, a Financial Adviser (FSP1007497) providing advice under the Mortgage Managers licence (North West Group Holdings Ltd, FSP682791). See the Disclosure Statement.