Due diligence activities have gained considerable importance in a corporate world that is increasingly dependent on up-to-date and reliable information in decision-making processes. It means, in free translation and in summary form, carrying out due diligence in the search for data and documents that support a correct assessment of the risks involved in a given transaction.

Real estate due diligence, therefore, is the application of the concept of prior diligence to the context of business involving real estate, in other words, a type of real estate audit. This is an essential conduct not only in purchase and sale transactions, but also in rental transactions, since the use of the property, in many situations, will require a series of special adaptations and formalities.

Furthermore, it is necessary to pay attention to properties already acquired, since operations such as mergers, acquisitions, investments, guarantees, collateral, mortgages, financing or bids, among many others, will require up-to-date documentation and compliance with all formalities.

Businesses involving real estate typically involve large amounts and/or significant agreement terms. Therefore, whether in the purchase or rental, the parties that eventually make a mistake will be subject to serious financial consequences.

These characteristics justify the real estate audit taking care to cover not only aspects related to the period prior to the transaction (directly linked to the property and its owners), but also subsequent aspects (relating to the intended use of the property).

• confirm whether those who present themselves as owners are actually owners and whether they have the power to negotiate the property;
analyze whether all documentation (registration, plan, project, permits, certificates, etc.) is in order;

• analyze whether all documentation (registration, plan, project, permits, certificates, etc.) is in order;

• physically inspect the property for structural problems that would make the deal inadvisable;

• seek possible administrative or judicial proceedings of a civil, labor, criminal, environmental nature, among others, which may result in expropriatory measures such as expropriation, blocking, seizure, attachment or compulsory conveyance;

• check whether there is any type of encumbrance hanging over the property that would make the transaction unfeasible, such as listing, inalienability, mortgage, fiduciary sale, among others; and

• assess whether the individuals who owns the property and, in the case of legal entities, also their partners, have debts against them, whether judicial or not, that could lead to their insolvency and, consequently, imply the future cancellation of the business.

•determine whether the nature of the activity to be carried out on the property requires obtaining special licenses, permits or authorizations;

• investigate the possible need for reforms or special adaptations that require significant financial support;

• examine whether the location, construction index, appreciation potential and market context, among other elements, recommend or not the acquisition for incorporation or investment; and

• · calculate taxes and other charges applicable to the purchase or lease, determining the future maintenance cost.

Real estate due diligence goes far beyond obtaining documents related to the property and negative certificates regarding its owners. This is a complex and multidisciplinary activity, which involves the application of a series of legal, economic, financial and architectural concepts, which are difficult for a single person to master. A true audit in which documents and information are collected and analyzed, producing conclusions that will determine the risk to which the buyer or tenant will be exposed in the negotiation.

In this sense, it is important to seek specialized assistance to avoid losses when closing a real estate deal. Furthermore, it is essential to maintain the regularization of properties already acquired, preventing expired taxes, permits or licenses, among other inconveniences, from causing losses in other negotiations.

PLBrasil Paralegal has qualified professionals and trained teams to provide full support to individuals and legal entities, including carrying out real estate due diligence. PLBrasil Paralegal also offers its clients, through its own platform, a document HUB, where all corporate documents and history are concentrated and permanently available, with constant monitoring of deadlines and obligations.