Lawyer’s Due Diligence for Real Estate Acquisition
Eliminate all the legal risks when buying a property. Hire a lawyer for checking the ownership title, the land book and the courts’ pending suits.
Why should you be diligent when buying real estate?
Losing the paid advance, additional costs generated by moving in late in your new home and the discomfort of living in smaller surfaces than the ones established in the presales agreement.
It is very important to get to know the potential seller before buying an apartment.
There are a lot of potential issues which the seller might not disclose willingly.
The main potential issues which will be checked during the due diligence are:
– check the land registry to see if the natural person/legal entity is in fact the owner;
– if the owner is a married person, as long as they have a joint patrimony, you will need the spouses’ approval;
– check the land registry to see if there are mortgages on the property;
– check the land registry to see if there are any other privileges on the property, renters or promises to sell the property to other third parties;
– check potential ongoing litigation in which the owner is involved and might have consequences on the ownership right;
– if the seller is a company, a status check is necessary (e.g. if the company is insolvent, you will need the approval of the judicial manager or liquidator).
In conclusion, by doing the due diligence you diminish the risks which accompany buying a property.
The due diligence report is usually done by a lawyer who checks all the information above. We have experience in doing this type of report both for natural persons and legal entities.
Special warnings if buying an unfinished construction
You need to pay special attention when buying an apartment which isn’t finished it (the construction is not terminated).
The developer will request you to sign a pre-sales purchase agreement which will contain most of the provisions in favor of the developer.
For this reason, you need to carefully go through the agreement and negotiate the provisions.
Most frequent issues that occur in practice and need to be covered by the pre-sales purchase agreement, in order to protect the buyer, are:
– since there is no individual land registry, the developer might sale the same apartment to more than one person;
– there might be ongoing litigation referring to the construction authorization and the building might be illegally built;
– the surfaces, in reality, differ from what was initially agreed on, the windows are smaller, the doors are misplaced, the layout is different;
– the apartment isn’t handed over in time;
– the sale purchase agreement isn’t signed on the agreed date;
– the developer refuses to sign the sale purchase agreement;
– the parking place is occupied by the ongoing construction and not delivered to you on time.
So, if you decide to buy an apartment under construction, alongside the due diligence report, it is advisable to check the presales agreement and negotiate the provisions in order to cover the additional risks of an unfinished construction.
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