Due Diligence Periods and Purchase Contingencies for Data Center Land

A purchase and sale agreement for development land usually gives the buyer three kinds of protection. The due diligence period (sometimes called a feasibility or inspection period) lets the buyer investigate anything and terminate for any reason, or no reason, before a deadline. Contingencies are narrower: they keep a specific question open, such as rezoning approval or a utility commitment, past the end of that free look. Closing conditions are the things that must be true on the closing date, such as clean title and the seller’s representations still being accurate.

For most commercial land, a 30–60 day diligence period is common. Counsel working on data center deals describe that window as generally inadequate, because utility interconnection studies alone can stretch for months.¹ Title and survey review also tends to take longer than on a typical project, because easements, mineral rights and other third-party interests can interfere with a large campus layout.⁹ The result is that data center contracts often pair a moderate free-look period with longer, milestone-based contingencies for the slow items.

Neighboring guides cover the documents on either side of this one: letters of intent set the business terms, and option agreements are the main alternative to a contract with contingencies. The broader list of what to investigate is in the site due diligence checklist.

Power is the contingency that most often decides whether a data center land deal closes. A will-serve letter can give some comfort about current or expected capacity, but it is not a delivery commitment.⁹ If the utility has to add capacity or build infrastructure to reach the property, the project risks delay or may not be completed at all.⁹

Two features make power different from other contingencies. First, a site’s utility capacity and service rights usually arise from contracts and tariffs rather than recorded real-property interests, so they do not show up in a title commitment, and a change of ownership may need the utility’s consent or a new agreement.⁴ Second, large-load tariffs increasingly carry 12- to 19-year minimum-billing terms and exit fees, a liability that also will not appear on a title report.⁴ A buyer that closes on “power available” without reading the service terms can inherit a long payment obligation.

Public examples show how this plays out. Compass Datacenters extended its diligence period on 280 acres in Milton, Ontario, to evaluate power options, then called off the purchase after it did not receive the electricity allocation it wanted; a broker said the seller had grown tired of waiting for a definitive answer.⁸ In Ohio, a developer of a proposed $2 billion data center in Oregon asked the city for six more months, citing complications after an electrical study and the need for additional permits.¹⁰

• Define the milestone: a completed load study, a signed facilities or electric service agreement, or written confirmation of a stated MW amount by a stated date.
• Name who pays for studies and deposits, and what happens to them if the deal terminates.
• Require the seller to cooperate with utility applications and to assign any existing service rights.
• Allow the buyer to review the applicable large-load tariff and any contract demand or minimum-bill terms before the contingency lapses.

If the land is not zoned for a data center, the buyer will usually want a contingency that lasts through final, unappealable approval of a rezoning, special use permit or site plan, with the seller’s cooperation in signing applications. Diligence should also cover pending changes: counsel advise reviewing proposed ordinances, state and local proceedings, utility commission dockets and any moratorium in effect, not just today’s zoning map.¹ One national firm now frames site selection as “power-plus-permission,” with regulatory, political and community risk weighed alongside power access.¹¹

Approvals themselves can carry deadlines that interact with the purchase contract. When Coweta County, Georgia, rezoned 326.6 acres for the Project Peach data center in 2025, one condition required the developers to obtain a power purchase contract within six months, a window that ended October 15, 2025, with the possibility of reverting the land to rural conservation zoning if the condition went unmet.² The board later granted 12 more months on a 4–1 vote, after the developer said its work with Georgia Power had slowed because the end user was not yet determined.²

Large assemblies add their own timing risk. Developers of the 1,034-acre Project Cardinal campus in Yorkville, Illinois, asked the city in 2026 to extend a July 1 deadline to acquire all parcels to December 31, 2027, citing “unforeseen circumstances.”¹² For process detail, see zoning for data centers and the permitting process.

The environmental contingency usually lets the buyer commission a Phase I ESA and, if it finds recognized environmental conditions, a Phase II, and terminate if the results are unacceptable. Its timing is shaped by federal rules. To qualify for CERCLA landowner liability protections, a buyer must complete all appropriate inquiries within one year before acquisition, and five components must be conducted or updated within 180 days of acquisition: interviews with owners and occupants, searches for environmental cleanup liens, government records review, visual inspection of the property and adjoining properties, and the environmental professional’s declaration.⁵

The practical point: a data center contract with a long power or rezoning contingency can easily run past 180 days, so the Phase I will need an update before closing. Budget for it. The assessment should also follow ASTM E1527-21, which EPA recognized as meeting the all appropriate inquiries standard effective February 13, 2023.¹³

Earnest money is usually refundable during the diligence period and becomes nonrefundable, or “goes hard,” once that period ends without a termination notice.¹⁴ Deadlines are strict: a termination notice delivered a day late can cost the deposit, so the notice method and time zone in the contract matter.

When the buyer needs more time, the usual currency is an extension fee. Buyer-side counsel describe paying extension fees smaller than the deposit, often nonrefundable but credited against the price, so the main deposit can stay refundable if a contingency fails.¹⁵ How fees are credited varies widely in practice. In one 2006 amendment, a $200,000 nonrefundable extension fee was applied in full to the purchase price.⁶ In a 2007 amendment, a $120,000 nonrefundable fee was split, with $70,000 credited at closing and $50,000 not.⁷

Public sellers add another layer. When Sabey asked Butte-Silver Bow, Montana, for a one-year extension of a February 11 closing deadline on 606 acres it had agreed to buy for just over $1.2 million, citing ongoing surveys, civil drawings and power negotiations with NorthWestern Energy, the council voted 9–3 to grant six months instead.¹⁶³

There is no standard length. The right period is the time it takes to answer the questions that would make the buyer walk away, and on data center land those are usually power and entitlement. A buyer should map the expected duration of each item before agreeing to dates, then decide which can fit in the free look and which need their own contingency.

Sellers will resist open-ended dates. The usual compromise is a firm outside date with a fixed number of paid extensions, each available only if the buyer shows progress, such as a filed application or a pending utility study. The Milton, Butte and Coweta examples all show the same pattern: time was granted, but less than requested or with conditions attached. For how these timelines fit the wider search, see how long site selection takes.

1. 01Diligence period long enough for title, survey, Phase I and a desktop power and zoning screen, with clear access rights for borings and surveys.
2. 02A power contingency tied to a named utility milestone and MW amount, plus review of the service agreement and tariff terms.
3. 03An entitlement contingency that runs through final approval and any appeal period, with seller cooperation on applications.
4. 04An environmental contingency, and a plan to update the Phase I if closing falls more than 180 days after the site visit.
5. 05Extension rights: how many, how long, what each costs, whether fees are credited and what progress must be shown.¹⁵
6. 06Termination mechanics: notice method, deadline time, and what happens to deposits, studies and utility applications.

Every one of these is a negotiated term, so have a real estate attorney draft the contract and confirm power assumptions with the utility in writing. A pre-contract screen of power, zoning and buildable acreage helps set realistic dates before money goes hard; you can get a site reviewed or see our methodology.