Due diligence is translated from English as a complete legal examination – a detailed report-analysis of real estate, the history of its acquisition and possible risks after acquisition.
Every potential buyer, when purchasing a real estate object, wants to be sure that in the future there will be no lawsuits, encroachments by third parties or any problems during the further operation. When buying any real estate, a potential buyer seeks to protect themselves from potential risks, so recently such a legal service as conducting a full due diligence of real estate is becoming increasingly popular.
During the examination of real estate, the analysis is carried out according to several criteria, which are not exhaustive.
History of the acquisition of real estate by the owner, tracking the entire chain of transfer of ownership of the object
In the section of studying the history of real estate, all legal documents, legality of real estate acquisition are checked, information from the archives of the administrative-territorial unit, state registers, BTI registration file, etc. is raised and analyzed and studied in detail.
Analysis of the land issue
During the analysis of the use of land under the real estate object, the facts concerning the legality of land use or disposal, compliance of the location of the object on the map according to the city master plan are studied, because the fact of non-compliance of the object with the city master plan is not will allow its further reconstruction without changing the purpose of the object.
An important point is to study the geo-basis of the site, ie a potential buyer, buying real estate, must be sure that the site does not have communications, the transfer of which is either impossible or too expensive. Also, when studying the land issue, you should pay attention to the location of the so-called red lines.
The red lines indicate the boundaries of the planned changes of land plots, ie the plots through which the red lines pass, further or may be redeemed by local governments in accordance with the provisions of the Law of Ukraine “On Alienation of Land Plots and Other Real Estate Objects”. in private ownership, for public needs or for reasons of public necessity “, or by local and / or regulatory authorities will create a number of obstacles to the further operation of the property, such as a ban on reconstruction, etc.
When analyzing the land issue, a mandatory study of the presence or absence of easements, superficies and any other restrictions, which are registered in the new State Register of Real Property Rights or by their terms of occurrence were not subject to registration in the register. After all, when purchasing real estate, the buyer may face claims from third parties who will state their claims for the ability to use the site to meet their needs.
Monitoring the presence of encumbrances or litigation regarding real estate
One of the most important points in the legal examination of real estate is to examine the presence or absence of encumbrances in the form of arrests, mortgages, leasing, as well as open and closed litigation regarding the property. Closed proceedings are also subject to detailed analysis in the light of the fact that interested parties can often open proceedings on newly discovered circumstances or renew the statute of limitations and initiate a new lawsuit against the property.
It is also worth paying attention to the presence or absence of the seller in the single register of debtors. Having found him there, it is possible that enforcement proceedings have been instituted against the seller, and he is specially selling the property to protect it from foreclosure.
As a result of due diligence, the potential buyer receives a complete picture of the property. The result of the legal examination is a conclusion that covers all possible risks associated with the acquisition of the object, as well as an assessment of their severity. Quite often, lawyers in their conclusions also optimize the procedure of purchasing real estate in terms of taxation and costs of notary services.
Thus, conducting due diligence of a real estate object can help a potential buyer to identify a threat at the stage of negotiations on the purchase of a real estate object and not to get into unpleasant situations related to lawsuits.
Our team of lawyers is ready to help you in resolving your issue, as well as provide advice for detailed analysis.
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