Look Before you Leap – Due Diligence

When an incoming buyer gets an opportunity to view the property before agreeing to proceed with the purchase, more often than not, the Seller may or may not provide all the details to the broker in relation to the property, unless asked for or only after the buyer has agreed to proceed with the purchase.  In such cases, the buyer has to be vigilant and seek all the information that they think would be relevant in future  before saying yes to the transaction. If the Seller is forthcoming with the information, then the buyer has nothing to worry about, however, if the Seller insists on signing the agreement first and then disclosing the details, then in such  cases, it would be prudent for the buyer to walk away from the deal without any hesitation.

In most cases, the Seller will provide just the basic information on the property which is mostly outlined in the title deed itself.  Although the buyer does get an opportunity to view the property, he may not become aware of the other underlying or hidden issues, if any.  For example,  when buying a  Villas, the buyer should be asking whether there was any major leakage during rains, or whether any modification was carried out and whether permits are available for such modification, etc.  Warranties from the Seller are important in such cases.

It is therefore important for buyers to ask for as much information on the property before agreeing to any purchase. A copy of the title would usually be sufficient to determine that there is a proper and clean title, however, it is not necessary that the title would be free of any encumbrances.  It is in this context that a proper due diligence exercise is undertaken to ensure that there are no encumbrances attached to the property, there are no notices or possible litigation in the pipeline, etc.   

In so far as purchasing off-plan properties on the secondary market, buyers should be extra cautious and do some advance research on the project and the developer.  It is imperative to ask for a copy of the sale purchase agreement to understand the obligations of the buyer and know if there are any encumbrances other than the normal outgoings attached to the property.   It is also imperative to know more about the developer,  the standing in the market, the projects delivered in the past and quality. 

We can assist with any due diligence exercise if required when buying a ready property from the secondary market. Get in touch with us and see how we can help.