Investors: Do your Due Diligence!
Seller disclosures can provide much information about what has been done to and what is known about the house. If there has been recent remodeling, were all necessary permits obtained? Federal law requires disclosures regarding lead paint and other hazardous materials such as asbestos used in houses built prior to 1978.
Checking the chain of title on a property may reveal liens, covenants, restrictions or easements that may affect the buyer’s use of the property. A check of the zoning may reveal opportunities to further develop the property in the future, or perhaps even a subdivided tax lot that the seller did not know about.
Due diligence on a commercial property may be even more complex, with various environmental reviews, surveys, and a review of sellers’ “books and records” to include leases, rent rolls, and maintenance records.
When working with contractors or partners, due diligence may include a review of business licenses, professional reviews, testimonials and personal references. If you are lending money, you may want to do the same due diligence on the collateral used to secure your loan, and on the borrower personally.
Always check references. Always. Ask me how I know….