Business and Project Advisory

Technical Due Diligence is the process of systematic review, analysis and discovery in which a prospective purchaser, occupier or financier of property gathers information about the physical characteristics of the property in order to enable them to make an informed assessment of the risks associated with the transaction.

Most physical improvements have defects or deficiencies which could impact on their short, medium, or long-term performance. The defects may include the need for repairs arising from a lack of planned preventative maintenance, neglect or misuse, insufficient capacity and code non-compliances of building services.

The majority of the large property “owners” are institutional investors who manage a portfolio of property assets on behalf of their beneficial owners. They may be held in the form of listed or unlisted property trusts, property companies or syndicates. The managers of these investment vehicles have a fiduciary responsibility to the ultimate owners in making acquisitions, to ensure that all reasonable risks and liabilities are understood. Further, the maxim of “caveat emptor’ (let the buyer beware) is still a guiding legal principle in all property transactions. Unless the seller expressly promises something about the physical condition of the property, the seller does not warrant anything in relation to its condition. The party acquiring must take reasonable steps to discover as much about the acquisition as possible before committing to a commercial transaction. The process of Technical Due Diligence is therefore critical to any successful property transaction.