Is the process of examining the details of a Real Estate transaction to make sure it is legal and to fully apprise both the Buyer and Seller of as many facts in the deal as possible. When the deal satisfies both aspects of Due Diligence, the two parties can finalize and close the transaction.
With proper due diligence, all involved parties are educated, informed, and covered in a transaction, an arrangement, or any other kind of agreement. Think of it like homework: It should be completed before the close of a deal to provide a buyer with a guarantee of what he is getting.
The process validates the accuracy of the information presented, ensures that the transaction complies with the criteria laid out in the purchase agreement, verifies that the parties consider all benefits and risks, and allows the buyer to know what he is buying.
Before purchasing, investigations into the title should be done to ensure there are no encumbrances on the property. This includes:
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Title deed and past records before the Costa Rican Public Registry
- Surveys and records before the National Cadastral Registry
- Land records (all present uses of the property)
- Construction permits (if applicable)
- Structural and Engineering reports (if applicable)
- Proof of correct zoning
- Survey revision
- Environmental aspects
- Service contracts
- Revision of all utilities and their bills
- Liens, judgements or claims attached to the property.
Due diligence increases the chances of a successful deal by uncovering major problems or assets that need to be addressed. Without proper due diligence, unforeseen problems may arise after the deal closes. At that point, they fall on the buyer, which may not be able to address them through litigation.
