Land Due Diligence

Significance of Overseas Land Due Diligence

Real estate is one of the fastest-growing sectors in India evidenced by a sharp
increase in real estate transactions involving buying, selling, leasing, and
financing of properties. In addition to transactions in urban areas, we have
also witnessed large-scale procurement of land from individuals in villages
close to the urban, industrial, and commercial centres. Similarly, there has
also been an increase in leasing (both short and long term) of commercial
office space.

The increase in real estate transaction values combined with the growing
participation of the organized sector in real estate has resulted in heightened
awareness of the risks involved and, consequently, the need for ensuring that
the risks are identified and minimized in such transactions. 'Legal due
diligence/ title search' of real property (be it of vacant tracts of land or of
constructed residential/ commercial/ industrial properties) is clearly the mode
for achieving these objectives.

A due diligence exercise is probably the most important aspect of a transaction
involving real estate immediately following a broad understanding of the
commercials. This process has the potential of not only impacting the
commercials but also determining the feasibility of the transaction itself.
While the commercials often pay high importance to expedite the conclusion of a
transaction, it is critical in the interests of the players to provide adequate
time and attention to the detailed buying land due diligence of the property
involved. It is important to realize issues such as title, permitted use, the
legality of construction, encumbrances and easements which have the ability to
impact the very nature of the property and its suitability to the commercial
needs of the transaction.

Needs for Conducting And Scope of due diligence for overseas land purchase of
Real Property
Due diligence before buying land overseas is conducted mainly to verify the
ownership of title over the property and any encumbrances over the property, so
as to protect one against pre-existing claims over the property. Such claims
could either affect the ability of the transferor to transfer the property or
could attach themselves to the property even after it is transferred.

The primary objective of overseas land due diligence report is therefore to
gather information. The extent and type of due diligence to be undertaken by
the purchaser's lawyer will depend on the following:

1. the risk profile and business objectives of the purchaser/ lessee;

2. the type of real asset involved;

3. nature of the real estate transaction (i.e., whether it is a purchase, long
term/ short term lease, mortgage, or financing of the real property);

4. the time frame for completion of the transaction; and

5. whether the purchaser is looking at obtaining third-party financing either
pre-transaction or post-transaction.

In case of a prospective purchase, a lease of the property, or real estate
financing, a title search is performed primarily to answer three questions:

Does the owner/ lessor have sufficient authority/ interest/ right to enter into
the transaction involving the property in question?

Do any liens exist on the property which needs to be discharged before the
consummation of the transaction in question? These could be in the nature of
mortgages, charges, acquisitions, unpaid taxes, litigation, easements, and
other assessments.

What is the nature of restrictions on the use of the property?

Apart from undertaking title search/ due diligence for purchase or lease of
properties, a title search/ due diligence is also performed when an owner
wishes to mortgage the property with any bank, financial institution, or
lender. Such a bank/ financial institution/ lender may require the owner to
submit a due diligence report of the property or may conduct such diligence on
its own.

For more information about global company dissolution, please feel free to
contact us!

There are many business advisory companies, but we are one of the best choices
for you.

Minimum Order: 1 pieces

Click to Enlarge