General

What should you be looking for when you inspect a seller?

When you purchase real estate, you are making an investment that lasts decades. Therefore, you should always investigate the seller to ensure that you are working with someone on whom you can rely, which is called due diligence. Due diligence refers to commonsense actions that a person takes to ensure that a particular contract is worthwhile.

Due diligence can apply to a variety of investigations including credit checks and background checks. Due diligence might entail you calling references or even inspecting their records. Regardless of what you do, for what should you be looking?

You need to inspect the seller’s records regarding the property, specifically, confirm the full extent of the seller’s ownership interest. There are many ways to “own” property and not all of them mean they can transfer it to you in full in perpetuity. You need to review the seller’s records to confirm that they can transfer to you the property rights that you desire.

Next, you should confirm that the property you are acquiring has the proper permits. You can check municipal records for any liens against the property, penalties or notices attached to the property.

You should also review the seller’s financial situation. You don’t want the dealer to fall into bankruptcy before you complete the deal, it could cause the property to be frozen until the proceedings are complete. You should request profit and loss statements, loan documents, balance sheets and service contracts to ensure the seller is in the right place to sell you this property.

Finally, thoroughly review all of the financing details and the contract itself. Scrutinize the terms of the financing arrangement and the contract. You don’t want to get trapped in an unfavorable situation. A lawyer can help you catch these issues before they crop up.

Before you ever enter into a real estate transaction, you should always investigate the seller of the property. A lawyer can help you conduct due diligence by inspecting records and confirming that you are receiving everything you expect under the contract. An attorney is a great insurance policy to ensure that you avoid potential future litigation due to misunderstandings. Moreover, an attorney who is there at the beginning can hit the ground running should a contract dispute arise.

Mon Aug 27, 5:38pm