Categories: Blog
Undoubtedly, the purchase of a property or of real estate, whatever the reason, represents one of the most important decisions made by anyone, from a financial, personal and family point of view.
In order to avoid a bad investment or a legal situation, and to ensure that the purchase of a property to be acquired complies with the purpose for which it is wanted and has no contingencies, it is essential to carry out the so-called Due Diligence Process.
This is, in general terms, the process of investigating the property, in order to discover possible hidden risks that may harm the interests of the buyer.
In this sense, we will now proceed to list the main aspects that must be considered when carrying out the due diligence process:
|
Revision of: |
Motive |
| Property Title | It is essential since it will determine if the person who sells is duly legitimized. |
| Property Transfer History | It is extremely important since it will help us detect any irregularity in previous transfers that could affect the peaceful ownership of the property. |
| Annotation review | It is essential to determine what are the annotations that the property has. |
| Review of cadastral plan | We will confirm the size of the property. When the plan is old, it is recommended to hire an expert to carry out a rectification to confirm the measurements. Likewise, you can request a Certification of “Cadastral Zone”, issued by the Registry of Real Estate of the National Registry. |
| Municipal Tax Certification | The property is responsible for municipal debts, so they must be kept up to date at all times, apart from value updates |
| Land Use Certification | If there are no constructions, it will indicate if said property can fulfill the purpose for which it is intended to acquire. For example: i) that a condominium can be built, ii) that a business can be established, iii) that a number of flats can be built, among others. |
| List of Utilities and payment receipts | It is important to confirm that the property is always received free of debts, or that it is known about them and that they are accepted in the sale. |
| Well Inventory | When there are wells it is important to confirm that the permits are up to date. |
| Visit to the Property | A visit to the property will always be elementary. Any number of concerns may arise or be discarded. |
| Regulatory Plan Review | Same reason as the Land Use Certification |
| Identification of possible environmental contingencies | It is important to verify that the property is not affected by environmental issues that prevent or limit its exploitation. |
| Confirmation that the property is not affected by special laws | Within this, it is verified that the property is not affected by special laws that impede or limit its purpose. |
It is important to clarify that each case has its particularities, so this list is not definitive. At the time of writing the Purchase-Sale Agreement, it is important to detail which documents must be provided by the Promising Seller, for the purposes of carrying out the study.
Once all the information is available, we proceed with the preparation of a formal and well-founded report, through which the formalization of the sale will be recommended or not.
At ERP Lawyers we will always recommend that you carry out the process in order to guarantee the investment, or at least assume the risks in an informed way. Under no circumstances is it advised to proceed with the business without such due diligence.
ERP Lawyers & Associates has a specialized team in real estate to purchase of a property. Contact us and receive personalized legal advice.
