Due Diligence prior real estate purchase (essential)

Most real estate acquisitions involve a considerable investment for buyers. Therefore, it is important to verify that the property complies with all the characteristics and qualities necessary to allocate it to the activities that are intended to develop in it.

Among the aspects to be reviewed, are the following:

• Property Title: Verify that the seller is the owner and has sufficient capacity to sell the property, or verify the limitations it has to sell (Example: A property that is subject to a succession, to be sold, requires the consent of all joint heirs, in addition to the executor).
• Antecedents of property (title chain): To review the acts that preceded the Title of Property to verify that the seller has a valid title.
• Cadastral Information: Review the cadastral registry to verify the description of the property (surface of land and the constructed surface) and compare it against a topographical survey, in order to be sure that both coincide.
• Status of payment of real estate taxes: The payment of contributions related to the property are an essential requirement for it to be transferred.
• Land Use Information: Verify that the land use of the property is compatible with the activities that the purchaser intends to develop in it.
• Environmental condition of the property: Verify that there are no toxic or dangerous materials in the property.

It is important to note that, if there is a hidden defect that makes the property unfit for the use intended by the purchaser, the latter may only claim it if it was unknown at the time of acquisition.

The purchaser can request the rescission of the contract and the payment of the expenses that he had made, or, that a part of the price he paid for the Property be reimbursed. If the seller knew the vices, in addition to the foregoing, he will be obliged to pay the damages and losses suffered by the purchaser.

For example, if it were intended to acquire an industrial plant and there were toxic or dangerous materials in it and these were hidden by the seller during the purchase process and the acquirer finds them after the purchase, he will have the right to demand a price reduction or the rescission of the contract and claim for damages and losses.

If the defect occurs after the acquisition, the purchaser can not claim the seller for such defects.