INTRODUCTION
Due diligence is generally defined as the thorough research (investigation) carried out before signing a contract, especially one involving a purchase or sale in this case purchase of Real Estate.
CONDUCTING DUE DILIGENCE IN NIGERIA
By conducting due-diligence, you assess the risks associated with the property you are planning to purchase. You review the documents and ensure that there are no legal encumbrances on the property. You confirm that the seller has title to the property and has the Legal right to sell same.
Your goal in the due diligence process is to make sure that the property you think you are getting is actually the property being conveyed. Remember, each transaction has its own unique set of obstacles and considerations, so give each purchase the unique respect it deserves. Armed with this information and guidance, you are well on your way to ensuring the purchase of a sound investment.
Through due diligence, a prospective purchaser confirms all facts relating to a property’s history, title, etc. A title means right in the property. The word title does not always imply ownership in the property. It can also mean the right over the property as owner or possessor or permanent lessee.
Due Diligence for Real Estate Investment is conducted at the Lands Registry in Nigeria. It involves a Search on the property using the relevant information (location, coordinates, seller’s name etc.)
BEFORE YOU INVEST IN REAL ESTATE
- VALUE THE PROPERTY CORRECTLY
What due diligence does for an investor is it allows them to figure out what is the property that he/she is purchasing is really worth. What are its pluses and minuses, strengths and weakness, and ultimately, what is its true and potential value. You do that during your Due Diligence (investigative) process.
- CONDUCT A SEARCH
Engage a Real Estate Lawyer to conduct a search at the Lands Registry to confirm the title of the property to ensure that there is no encumbrance and the property is compliant with the extant building laws.
- VERIFY EVERYTHING
Never expect the Seller to give you a list of everything wrong with the property. They’re hoping you won’t find anything wrong. Don’t assume anything. If you want to assume anything, assume nothing. If you want to assume anything, assume that there are some problems you need to find and your job is to look for them
- ENSURE THE AGREEMENT IS WATER-TIGHT
The Due Diligence was successful and it is time to make payment. Ensure that the Agreement is executed with all the parties and witnesses before making payments. If the Legal Agreement is not drafted by your Lawyer, make sure hr reviews it to protect your interests.
CONCLUSION
Investing in Real Estate is serious business and is not for the faint hearted. Never assume anything. Engage a Real Estate Lawyer to protect your interests and investment.