After the house visit, most buyers are usually in a rush to close the deal and become the newest property owners in the neighbourhood. However, conveyancers often advise their clients not to be in a rush since they need to conduct due diligence on the property. Most conveyancers prefer to conduct this activity before you make any commitments. However, if you are in a rush, the conveyancer will perform due diligence during the cooling-off period. So, what is due diligence, and why is it so important? Read the extract below.
The primary objective of due diligence is to establish whether the property is a safe financial investment. The conveyancer begins by assessing the reasons why the property is on sale. For example, some people will list commercial properties on the market when there are no longer viable. If this is the case, you will need to spend a substantial amount of money to revive the investment. On the other hand, some people will sell residential properties when the neighbourhood is no longer conducive. For example, it could be a noisy neighbour or an upcoming development that could interrupt their family life. It would be difficult to identify such things during the home visit. However, your conveyancer will let you know.
The conveyancer will also assess internal factors that could cause liabilities or make your stay uncomfortable. As such, they will assess land maps to determine the exact boundaries of the property and the existence of any easements on the property. For instance, if the public drainage runs through the property, what would happen if it started leaking? You could also be shocked to find out that a section of the property, such as the backyard or garage, belongs to the neighbours. Your conveyancer will also assess the susceptibility of the property to natural hazards. For instance, even though the property is not located on a flood plain, it could be prone to flooding during the rainy season.
A critical aspect of conducting due diligence is establishing the legality of the development. For instance, is it in accordance with the zoning laws? Did the contractor follow the building code? You risk severe penalties if the building flouts these regulations. In severe circumstances, you could be compelled to pull down the structure. If the property is located in a strata development, the conveyancer will present you with a copy of the development's bylaws. Regulations regarding the keeping of pets, installations on your front yard or the holding of parties could deter or encourage you into buying the property.
Due diligence is one of the most critical aspects of the conveyancing process. As a rule, you should always leave this work to an experienced and licenced conveyancer.Share