Due Diligence In Real Estate Transactions

811-Due-Diligence-When-Buying-Real-EstateReal estate transactions involve a significant amount of money and rights of individual. The due diligence process minimizes the risks and provides safeguards against determinable issues that may affect the real estate transaction.

Making the right decisions in real estate transactions can be a challenge without complete and accurate information. A traditional legal principle is “caveat emptor” or “buyer beware.” This is from the traditional rulings that courts would make that the buyer was stuck with whatever he or she purchased and would have limited recourse. Due to this likely result, buyers had to be extra cautious when making buying decisions.

Due diligence provides for a thorough investigation into a transaction. It helps the buyer learn more about the property, the documents, environment and operational fundamentals of the deal. This process helps avoid surprises after the transaction when remedies may be limited.

The actual scope of the due diligence process depends on the buyer’s needs and the transaction itself. If the buyer is a developer, he or she may have very different needs than when the buyer is purchasing the property for lease or investment. There are individuals who have a pending court case and interested in knowing the property to determine the site and use as evidence in court.

The due diligence process begins by determining the expected use of the property and use this information as a framework. Due diligence seeks to address a number of issues and identify important information for buyers. This information includes determining the property’s owners, boundary lines, the rights that come with the sale, the expected future use of the property and highest and best use as development options. The process should identify any issues related to the property title, easements, encumbrances, liens or other hurdles to complete ownership. Additionally, the due diligence process can reveal if there are any restrictions that might affect the use of the property or its development, such as environmental issues, zoning restrictions or legal compliance matters such as abiding by Agrarian Reform Law, NIPAS Act, Agriculture and fisheries Act, road right of way act, government programs and more.

The due diligence process can also reveal information as it is uncovered. For example, the technical description plotting cannot be close may pop up after the document analysis is conducted. Additionally, it is important to determine the real estate market and demographic data to predict the future demands in the area.  Site inspection will determine the actual topography, terrain, shape, boundaries, neighbourhood and existence of any occupants or informal settlers in the property.

Last but not the least, is the environmental assessment, to uncover any daunting environmental hazards or issues of the property such as gas leak, wet lands, or use of the property as manufacturing in the past.

The due diligence process is very important. Adequate time must be reserved for this process to be conducted thoroughly and carefully. Party in a transaction should be encouraged to provide specified documents and information to ease the transaction. Be aware of all interests, liabilities, expenses and possible uses for the property.

This information will allow parties in transactions to make an informed decision.

EnP. Gus Agosto conferred Fellow status

Urban Planner  Gus Agosto, a faculty of the University of San Carlos, was conferred  with Fellow Status by Social Watch Philippines and People’s Public Finance Institute at the University of the Philippines, Lahug, Cebu City,

Social Watch Philippines is the network of hundred non-government organizations that initiated direct citizens’ participation in national and local budget processes through the Alternative Budget Initiative (ABI), while People’s Public Finance Institute is a center that educates the general public, civil society organizations and individuals on national and local public finance processes working under the framework of citizens’ participation.

Fellowship is an honor bestowed upon individuals that contribute in further strengthening citizen’s engagement in public finance. The new Fellows are drawn from academe, practitioners and graduate students across Central Visayas.

“I feel quite honored that Social Watch bestowed Fellow Status upon me,” Planner Gus said. “By doing so, they have acknowledged my teaching work in public finance and its contribution in important ways to students, professionals and the broad public. It is both gratifying and humbling at the same time.”

As a faculty, he is teaching public finance at the University of San Carlos, Cebu. “I’m very interested with the topic, being an urban planner and economist; I’ve been involved in various ways in public finance.“ Planner Gus also has a professional interest in the role that a Fellow can play in supporting and improving public involvement in government finance.

Prior to the conferment, a two-day discussion on the development of public finance and citizen’s engagement was held in collaboration with Social Watch Philippines, United Nations Development Program and University of the Philippines-Cebu.