Real estate due diligence is an in-depth examination of the legal situation of a property. Due diligence usually takes place prior to major investments. Due diligence is also useful for other transactions such as a gift of real estate. In other words, it is recommended when you want to find out about the feasibility of a project before a final purchase or donation at a certain value.
Why is this useful?
Based on a thorough examination of all aspects of the property, you can determine the value of the property. You will also identify any risks. You can then mitigate the risks present through suitable contractual clauses. Due diligence thus ensures that you avoid surprises afterwards.
There are different types of due diligence. You can have the financial, tax, legal, environmental and commercial aspects of the property to be purchased investigated.
Buyers vs. vendors due diligence
A due diligence can be prepared by both the person purchasing the property (buyer due diligence) as the one selling the property (vendor due diligence). By a vendor due diligence fulfils the seller's duty to provide information. It also eases negotiations with a potential buyer and increases the chances of achieving the requested price.
Private vs. public law
There are various aspects you can have investigated. Within real estate, these usually distinguish between private and public law aspects.
As for the private-law aspects checks include whether the seller has a valid title, whether there are easements you need to take into account, etc. In Belgian real estate transactions, the private law checks are usually done in consultation with a notary.
In Spain and Portugal, however, the notary's role is limited. In these countries, the notary does not have an advisory role. Therefore, real estate due diligence is much more extensive for these countries.
Under public-law aspects Among other things, we look at whether things are in good order in terms of permits. For example, whether or not there are urban planning infringements on it and whether it is well located in the right zoning area.
In terms of Belgian real estate, Confianz specialises primarily in verifying the planning aspects in real estate transactions. This allows us to check for you whether the project you have in mind is urban planning feasible.
Read more about the process of a permit applications in Flanders.
For foreign properties, we examine both public and private law aspects. Here you will find, for example, more information on the Urban planning research in Portugal.
Technical due diligence
In general, this type of due diligence mainly concerns the technical condition of the building. Examples include checking fire safety and the presence of asbestos. The conformity of certain installations with environmental regulations is also checked. Specialised firms assist you with this. For example, surveyors, architects, inspection companies, etc.
Technical due diligence is also appropriate for foreign real estate transactions in certain files. In Spain, for example, there is often uncertainty about the exact dimensions of a building plot.
Ultimate goal: a conclusive purchase agreement
Based on the results, you can draw up the sales agreement. For example, with statements from the seller, clauses on compensation or any suspensive conditions that must be met to make the sale final. That way, you safeguard your interests and your investment.