Due diligence of companies’ and holding companies’ real assets

Due diligence is a check-up of a real estate object before entering into a deal regarding the property in question, which includes legal examination of the ownership as well as other property rights.

Due diligence assesses the legal purity of the property, possible risks of exploitation, encumbrances, as well as likelihood of possible claims under the transaction with this property.

Such a procedure includes legal and technical expertise.

Legal expertise:

• Identification of the object’s owner
• Examination of title documents
• Verification of the authority to alienate or make another transaction with the object
• Verification of third-party consent, transaction approval
• Analysis of previous transactions with the object, verification of their validity
• Checking for encumbrances and restrictions
• Checking for pending or concluded legal disputes.

Technical expertise:

• Verification of the land’s use permit;
• Analysis of the information about the building
• Checking the possibility of construction on the land plot
• Checking the risks of real estate withdrawal
• Checking nearby objects for changes that lead to negative consequences.

Due diligence of companies’ and holdings’ real assets is necessary at the stage of preparation for a transaction related to a land plot, building or premise – acquisition, lease, concession agreements, shared construction, investment contracts.

Example:

Due diligence of apartments in Moscow before buying.

Risks:

• Lack of all owners’ consent
• Sale of an apartment by a person who does not have the right to sell
• Recognition of the house as an emergency one or its inclusion in the renovation program
• Withdrawal of land for the construction of roads or the construction of a highway in the immediate vicinity of the house.