The Due diligence of real estate options to mitigate the risks associated with real estate transaction

Due Diligence is a term used to describe the process of analysis, and a thorough investigation, carried out with the purpose to identify and assess the risks involved in the operation.

In the context of real estate, Due Diligence refers to a set of procedures to be conducted by an attorney to review and advise their client about the possible risk, legal, document, financial, and related to the real estate transaction, ensuring the highest security, and a basis for decision-making.

In a real estate transaction, whether it is for the rental or sale of real estate, it is essential that all parties involved are aware about the situation and legal and / or financial) of each other. For this reason, it is essential to verify if the part has a stock of the proceedings in his name, has a history of bad debts, or if it actually has the ownership right of the property the subject of negotiation. In many cases, it is necessary to contact the municipal organizations in order to obtain this information in an accurate and up to date, the procedure can be conducted safely and efficiently under the guidance of an attorney who specializes in this sort of thing.

These factors are crucial for the assessment of the transaction and its legal certainty and clarity, and it can be influenced, even at the price of the deal.

It is essential, therefore, to obtain detailed information about the property and its owners. This is because, for example, in the event that the seller has actual knowledge of a court order determining the payment of the debt, or the distribution of your assets, your property, even after it’s sold, you may be subject to further legal actions. The purchaser, therefore, you run the risk of getting a fine, which, in this or next years, then you will be able to be claimed in court for a discharge of this debt, is committed to the security and the validity of the transaction.

In such cases, it is not uncommon for judges to understand that you, the buyer, to have all of the information about real property through a Due Diligence process, it also acts as a facilitator of the seller in the commission of fraud against the creditors. In addition to losing the property purchased, the purchaser is still seen to be involved in a fraudulent practice, which can lead to legal consequences.

As I have said, the Due Diligence should be carried out by considering both of the parties involved, as well as the property. How much to real estate, the most important data to determine whether they refer to the obligation “propter rem”, that is, those associated with the well, and not to their respective owners, and remain attached to the property, even after the return of the property.

A classic example of this type of debt is the PROPERTY Tax and Urban land), which remains bound to the property, and it can be charged to the purchaser after the completion of the purchase, if they are not dealt with well in advance.

In practical terms, these liabilities could present a significant obstacle for your business, thereby threatening the financial viability of the operation and, in some cases, even to the end of the continuation of the business if the new owner will be held liable for the debts prior to purchase.

In the context of a lease to a commercial, it is essential for the entrepreneur, check to see if the real property is not subject to restrictions, and in compliance with the urban planning for the city. This analysis is critical in order to ensure that the intended use by the tenant is legally permissible to do so, thus ensuring that the business activity you want to be carried on in a regular manner, securely, and in accordance with the legislation in force.

For the safety and recovery of the investment in a real estate transaction is carried out through a Due Diligence process that is rigorous and well-conducted. This is the detailed process of testing and verification of the documents, the legal and the financial do not just and protects the buyer against any possible hidden liabilities, but also providing greater transparency and trust to the transaction.

Allanis da Silva Dourado – Graduate degree in Law from Pontifícia Universidade Católica de Campinas (PUC-Campinas) – she is the Author of the Articles, Paralegal have Associated with it.

Anna Paula freely and responsibly on Pine, a Lawyer with a degree in law, with a focus on civil law, from the University Presbyterian Mackenzie (2021), and which is registered at the Ordem dos Advogados do Brasil, São Paulo (OAB/SP) (2021). A post-graduate in Business Law from the Pontifical Catholic University of Rio Grande do Sul (PUC-RS). She is the author of the articles. A member of the State committee of the Business Law of the FEDERAMINAS. A lawyer for the Department, the Advisory does have Associated with it.

References:

GODO, F., Luiz. for The audit of the documentation of registration of real estate. São Paulo, the executive director, 2024. Available in:on The audit of the documentation of registration of real estate – executive director.pdf. available at: [accessed 13 jan. The year 2025.AIRES, Henrique Martins, Gontijo. The real Estate development and Challenges in the acquisition of land and the registration of the units, built-in. Goiás: a Repository of Academic Degree (SAR), 2024. Available in: real ESTATE development Challenges in the acquisition of land and the registration of the units built-in