Property Ownership In Australia – Due Diligence

Land in Australia is generally sold on an ‘as is, where is’ basis and the principle of caveat emptor (buyer beware) applies. This means that you, as a purchaser, need to undertake due diligence of a property before you buy as vendor warranties are generally of a limited nature. The extent of the due diligence you need to do is determined by the property’s nature, location, your proposed use and development, and your funding arrangements.

The time and the extent required for your due diligence must be factored into your acquisition timetable and normally includes physical, taxation and legal due diligence. Legal due diligence generally includes:

• Conducting a title search at the land registry, to determine the owner and any registered encumbrances (eg easements, mortgages, restrictions on use and agreements with government bodies about works or the property’s use);
• Applying for searches from various statutory authorities, to determine the government rates and taxes that apply, planning issues (eg permitted and prohibited uses and any restrictions on potential development), proposed resumptions and heritage issues;
• Reviewing any tenancy documents to verify income and identify capital expenditure and tenure risks; and
• Considering any planning or other approvals or licences required to hold, develop or operate the property.

You may engage other consultants to value, inspect or assess the property and its services and equipment, in order to identify future capital expenditure and the level of compliance with building codes and environmental due diligence. Financial institutions lending money will often do their own due diligence as a precondition of funding.