WHAT IS DUE DILIGENCE OF IMMOVABLE PROPERTY?
Due diligence for immovable properties involves investigating and verifying various aspects of a property before purchasing or investing. This comprehensive process helps buyers make informed decisions, identify potential risks, and avoid costly surprises.
The following are the steps one should adopt in safeguarding purchase of an immovable property:
1.
PROPERTIES WHOSE MODE OF OWNERSHIP IS A TITLE DEED
CHECKLIST
a. Request certified copies of the deed of grant/deed of transfer
b. Request for identity documents in triplicate that is:
i. National identity
ii. Passport; and,
iii. Drivers’ license.
BEST PRACTICES
a. Visit the Surveyor General’s office
This is done to obtain a legal description of the immovable property.
b. Conduct deeds search at the Deeds Office
It is highly recommended that the Deeds search be made physically rather than online. If the Deeds search is conducted physically one will get to ask any questions or raise queries directly to the Registrar or any designated officer at the Deeds Registry. The deeds search will also help highlight if there are any caveats, miscellaneous agreements, encumbrances (e.g. a mortgage bond), endorsements on the property in question.
c. Check authenticity of identification documents personally
There is no harm in visiting the Registrar General’s office and seek verification of a potential Seller’s identification documents.
d. What if the immovable property is subject of a Deceased Estate?
Where the property is subject of a Deceased Estate it is advisable to check the Deceased’s file at the Master of the High Court. The potential Buyer should check if there are Letters of Administration as well as a Consent to Sale from the Master’s office.
e. What if the immovable property is registered in the name of a minor?
If an immovable property is registered in the name of a minor, then consent of the High Court is needed, as the State is the guardian of all minor children until they reach the legal age of majority
f. Is there a tenant at the property?
If there is a tenant at the property it is also important to check whether they have been given the right of first refusal. If there is a lease agreement is important to check its provisions in order to determine the Tenants’ rights. The right of first refusal is a contractual provision granting a party the exclusive opportunity to purchase or lease a property before it is offered to others.
g. What if the immovable property is held under a Trust?
It is also important to check the authenticity of the Deed of Trust with the Deeds Registry. Further, before the transaction is consummated there should be a resolution duly signed in compliance with the Trust provisions.
h. What if the property is held under a Company?
One should check with the Companies registry to ensure that the entity is duly registered and the Directors can be verified. Further, before the transaction is consummated there should be a resolution duly signed by the Directors of the Company.
i. What if the property is a flat?
If the property is a flat or townhouse, the potential Buyer should check whether levies are up to date. The potential Buyer should request a levy clearance certificate from the owners’ association wherein that property is situate.
j. What if the property is subject of litigation?
One should also make efforts to ensure that they do not purchase property which is subject of litigation. This usually happens with Deceased Estates and Stands under development. If this is the case, a High Court check needs to be thoroughly done but the best is to avoid immovables which are under dispute.
k. Physical visits
One should also visit the property in question physically and to conduct an inspection.
2. PROPERTY WHOSE MODE OF OWNERSHIP IS LOCAL GOVERNMENT CESSION
CHECKLIST
a. Request identity documents in triplicate that is:
i. National identity
ii. Passport; and,
iii. Drivers’ license
b. Request for agreement of sale between the Seller and the local authority.
BEST PRACTISES
a. Visit the local authority with the said agreement of sale and check the authenticity of the cession
Visit the local authority in question to ensure the immovable property is authentic and also obtain a comprehensive checklist to be followed by both buyer and seller so as to effect transfer.
3. PROPERTY WHOSE MODE OF OWNERSHIP IS DEVELOPER CESSION
CHECKLIST
a. Request for identity documents of Seller in triplicate that is:
i. National identity
ii. Passport; and,
iii. Drivers’ license
b. Request for the subdivision permit
c. Request for the development permit
d. Request for the dispensation certificate
e. Request for the certificate of compliance
f. View the property in question.
BEST PRACTISES
a. Visit the Developer
A physical visit to the Developer’s premises to inspect the cession registry, as well as a comprehensive procedure of what buyers and sellers are to supply so as to effect transfer of cession is highly recommended.
b. Visit the Surveyor General
A physical visit should also be made to the Surveyor General to inspect their files to check authenticity of the subdivision permit etc.
c. Visit the City Council
One should also check authenticity of Certificate of compliance with the City Council.
CONCLUSION
When buying an immovable property, careful consideration is crucial due to high financial investment and the complexity of the process itself. Immovable property purchase is a long-term commitment and it also has significant emotional involvement. Therefore, before committing to the lifelong dream of owning a property, one should make significant investment in equipping themselves with knowledge of the property terrain as well as involvement of experts for guidance.