One of the most important purchases and investments anyone can make is buying a property. Getting what you pay for and ensuring everything relating to that property is correct, can save you thousands of dollars. This is where doing your due diligence comes into the picture.

But what does due diligence mean exactly? It’s a legal term assigned to the process where a prospective property buyer investigates all aspects of the property to guarantee they’re getting what they are paying for.

One common misconception is that due diligence is a process that only applies to big time property investors with millions of dollars to spend, and not the average homeowner. However, anyone who investigates the property they are purchasing is practising due diligence.

Too often we see buyers of properties not getting what they originally purchased. What happens is they agree to buy the property but fail to investigate all aspects about that property. This includes things like whether all the improvements on the property have local council approval, or whether there are no encroachments.

Due diligence  basically means doing your homework.  It means ensuring that you know that these types of key points have been thoroughly investigated  so that you  are getting exactly what you are paying for.

The last thing you want to happen is being hit with  surprise costs or problems that should have been discovered thoroughly through due diligence investigations.

When are due diligence enquiries conducted?

Most of the time the due diligence process begins before a buyer signs a contract and commences with a physical inspection of the property. The majority of the searches and inspections occur after the buyer signs the contract and may include:

1. Building and pest inspections to ensure the building doesn’t have any obvious structural problems or pest infestations.
2. Finance applications to ascertain that the buyer can obtain the necessary finance to purchase the property.
3. Independent valuation to guarantee the buyer is satisfied they are not paying too much for the property.
4. Searches of council records, which includes ensuring all the improvements on the property that require council approval have been granted.
5. A survey of the property to acknowledge there are no encroachments.
6. Where the property is part of a body corporate, a thorough review of body corporate records to make certain there are no known problems with the property.
7. Government searches include those of the Contaminated Land Register. This ensures the property is not contaminated.
8. Another essential search is the Department of Main Roads records, to ascertain that the department has no interest in the property.

There are many different investigations a buyer can undertake on a property. This is just a short list of the main investigations usually performed by an experienced conveyancer on behalf of property buyers.

What needs to occur for a buyer to be able to do their due diligence investigations?

In Queensland, the standard REIQ contract and similar contracts don’t give buyers much chance to perform due diligence enquiries beyond the usual building and pest inspections and finance checks. If a buyer wants to undertake more investigations, they need to add special conditions to the contract. These special conditions will then allow the buyer to do the extra checks they require.

We can help you exercise due diligence

A property buyer in the Moreton Bay region should always be satisfied with a property to ensure they’re getting what they’re paying for.

At NPR Law, our speciality is property law, and our conveyancing team can assist with the review and drafting of clauses that will allow you to undertake more detailed investigations if you wish, or indeed do the due diligence for you. If you require any assistance in this regard, please contact us on 07 3555 6333.