The due diligence clause. Know your property

The buyer should beware.  Anything that the buyer can find out about the property from a thorough physical and legal search is accepted as being known by the buyer and need not be pointed out.

We suggest that you look at least at these facts about the property whether you are

– selling (to judge the sale price and to protect yourself from later claims);
– buying (because you are buying voetstoots and you are expected to know them); or
– the agent (the Consumer Protection Act puts the onus on the agent to know the property):

• zoning and use rights (can be supplied by the muncipality or consult a town planner);
• your neighbours’ zoning and use rights and plans for future development in the area (municipality or town planner);
• the structural soundness of the buildings (structural engineer);
• the title conditions (a conveyancer.  See the contact us section if you would like to make an appointment to find you to an attorney who can help);
• the diagram of the property to show you the boundaries (conveyancer or land surveyor).  This may also be in the form of a general plan or, for sectional title schemes, a sectional plan.
• checking the location of the boundaries of the property and that there are no encroachments
  • by other buidings over the property; or
  • of the buildings you are buying over the neighbour’s property; or
  • by any buildings over building lines (land surveyor);
• the approved building plans.  Ask for the seller’s written permission to get a copy of these from the municipality (town planner or architect);
• whether the property is built in accordance with the approved plans (architect);
• whether any special law applies to the property such as the heritage protections on older buildings (town planner);
• whether the land is contaminated in any way (environmental specialist);
• an “automated valuation” showing recent sales in the area so that you can check the reasonableness of the asking price; (online search or valuer for a formal valuation);
• for sectional title, ask about
  • the minutes of the annual general meeting of the body corporate for the last few years.  That tells you the issues of concern to the owners in the scheme;
  • the current year’s budget of the body corporate;
  • the audited financial statements of the body corporate so that you can check on the financial stability of the scheme;
  • the management and conduct rules of the scheme;
  • whether a right to extend the scheme in the future exists.
• If you are buying farm land find out about
  • employee details;
  • rights of occupation over the property;
  • rights of third parties over the land;
  • water rights;
  • crop yields;
  • financial feasibility;
  • fences;
  • contamination of property;
  • details of fertilisers and chemicals used;
  • co-op membership;
  • roads and access.

Contact us if you need to make an appointment to suggest the service providers you may need to do this.  Leave enough time in your due diligence period to do a good job.

Weigh up the costs of a thorough due diligence so keep in mind what aspects of the investigation you want to prioritise.