About due diligence in general

"Due diligence" is a term used for a number of concepts involving an investigation, to a certain standard, of a business or of a person before signing a contract or document. Due diligence helps a buyer or an investor to ensure that there are no unforeseen problems with the asset or investment, and that the implied parties are not paying more than they would accept to be necessary.

Real estate due diligence!

The term is used to refer to an investigation of a determined real estate property, personal property, of a company or of an entity, which will include a detailed analysis of all the facts, conditions, rules, laws, regulations, financial considerations, or any other issues before a buyer, lessee, guarantor, creditor or any interested person takes a final decision on involvement in any proceeding concerning the real estate in question.

Since the real estate due diligence procedure involves the existence of certain stages, a ranking of the beneficiaries’ priorities, I personally understand to approach things starting from abstract but very important notions (ex. credibility of the partner identified by the beneficiary, clarifying and understanding the rights and obligations burdening the real estate property) towards concrete notions ~ exemplifying the physical condition of the real estate property.

An evaluation of the physical condition of the property shall include an analysis of the real estate functionality (lato sensu) in order to assess the maintenance works / investments that shall be executed and that would have an impact on its value.

Foundation, structural strength, roof, water infrastructure, drainage, electricity and gas, and other associated utilities, vertical transport, construction tire are just some of the elements that contribute to the understanding of the physical and technical condition of the property.

Such analyzes are useful both to negotiate the cost (price) associated with a property, and for financial planning.

     Part of the real estate due diligence process, but not limited to, are:

     1. The legal status of the property
     2. To see if the asset is free of any charges, and any easements or reciprocal agreements concerning property
     3. The status of the commercial and rental contracts of the property
     4. The regime from the land book and history
     5. The regime of fiscal role and history
     6. The regime of insurance and damage history
     7. Physical and technical condition of the building
     8. Access routes system
     9. Utilities infrastructure system, installed capacity and consumption, metering
   10. Underground and above ground utilities infrastructure system
   11. Parking / ramp loading / unloading cargo regime
   12. Environmental authorization regime
   13. Planning and urban coefficients
   14. Mode of transport and transit in the area
   15. Crime statistics for the area
   16. Groundwater status
   17. Seismic classification
   18. Special environmental conditions
   19. Special conditions of the market
   20. Special terms of real estate fiscality and the regime applicable to property

I think that part of the real estate consultancy activity is included in the due diligence activity - absolutely essential for the overall understanding of the actual situation of property.