Property Due Diligence:

Due diligence must be taken by purchasers of land, whether the prospective owner is intending to buy the property for personal or commercial use. Contracts for the sale of land may contain clauses or special conditions that seek to shift or move the liability from the purchaser to the vendor, however these may have limited scope in some circumstances. Generally, the vendor’s contract will be drafted in such as way as to put the onus on the purchaser so that he and only he is responsible for inspections, searches and investigations in relation to the property.

A property due diligence solicitor will be able to review a contract for the sale of land and highlight problem areas which may need further investigation. Many searchers can now be conducted online with automated systems offering almost instantaneous results for inquiries parties. Other searches and inspections may require the attention of a contractor who will provide a specialist report in due course. Many purchasers may rely on their own inspections of the property and be satisfied with what they themselves have discovered.

However, a property due diligence lawyer understands that sometimes sensitive matters can be difficult to locate. For this reason, solicitors and lawyers who deal with property transactions, the buying and selling of land for residential, commercial and industrial use, may be best placed to provide investigative services for a client (i.e. the prospective purchaser). Legal advice would be provided to the client which will outline all the matters discovered as a consequence of investigations and searches.  These may include the following:

• Easements on the property;
• Caveats placed on the property;
• Mortgages held by third parties on the property;
• The existence of registered leases on the land; and
• The zoning of the land:
  • What type of development is prohibited on the land;
  • What kind of development is permissible on the land without consent of the council;
  • What development can be carried out on the land but only with the consent of certain authorities;
  • Whether the land is in a flood zone;
  • Whether the land is in bushfire prone territory; and
  • Whether there are any special environmental requirements or mandates that apply to the land.
• The condition of the land:
  • Whether or not the land has been used for some purpose which does not accord with the present purchaser’s objectives or raises concerns that may prevent the purchaser from completing the contract;
  • Whether the land is presently polluted;
  • Whether there is a water tank or a sewer running through the land which may prevent it from being developed; and
  • Whether there is a lack of utilities or services on the land, such as:
    • Water supply and runoff;
    • Gas supply;
    • Electricity supply; and
    • Sewer connection.
• Whether there is any pending development consent on adjoining lots; and
• In the event that there is a strata scheme, a strata report will reveal whether or not the body corporate is involved in any litigation or whether it has any financial or other liabilities pending.

These are just some of the issues that may influence a prospective purchaser to either buy or not to buy property. The above list is by no means an exhaustive exposition of the concerns that a due diligence solicitor will turn him mind to when inspecting the property for the purpose of providing legal advice to his client. The due diligence lawyer will need to have regard to the relevant statutory searches and the provisions of the Conveyancing Sale of Land Regulations (paritularly in relation to prescribed documents).

Many of the reports and searches attract a disbursement fee, and these will need to be disclosed to the client before any of the above inspections take place. The greater the amount of inspections take place, the better the due diligence will be affected prior to the purchase being completed. For some business owners and developers of land, conducting detailed due diligence may be vital to their interests.

If you wish to make an appointment, please contact us by telephone on (02) 9233 4048 or send an email to info@navado.com. 

This webpage (and any material or wording appearing on this webpage) is provided for general information purposes only and does not constitute any Legal Advice. It does not take into account your objectives, your instructions or all of the relevant facts and/or circumstances. Navado accepts no responsibility to any person who relies on the information provided on this website. We further refer you to our Disclaimer.