Real estate due diligence: be very careful when buying or renting property
Due diligence activities have gained considerable importance in a corporate world that is increasingly dependent on up-to-date and reliable information in decision-making processes. It means, in free translation and in summary form, carrying out due diligence in the search for data and documents that support a correct assessment of the risks involved in a given transaction. Real estate due diligence, therefore, is the application of the concept of prior diligence to the context of business involving real estate, in other words, a type of real estate audit. This is an essential conduct not only in purchase and sale transactions, but also in rental transactions, since the use of the property, in many situations, will require a series of special adaptations and formalities. Furthermore, it is necessary to pay attention to properties already acquired, since operations such as mergers, acquisitions, investments, guarantees, collateral, mortgages, financing or bids, among many others, will require up-to-date documentation and compliance with all formalities. Businesses involving real estate typically involve large amounts and/or significant agreement terms. Therefore, whether in the purchase or rental, the parties that eventually make a mistake will be subject to serious financial consequences. These characteristics justify the real estate audit taking care to cover not only aspects related to the period prior to the transaction (directly linked to the property and its owners), but also subsequent aspects (relating to the intended use of the property). • confirm whether those who present themselves as owners are actually owners and whether they have the power to negotiate the property; analyze whether all documentation (registration, plan, project, permits, certificates, etc.) is in order; • analyze whether all documentation (registration, plan, project, permits, certificates, etc.) is in order; • physically inspect the property for structural problems that would make the deal inadvisable; • seek possible administrative or judicial proceedings of a civil, labor, criminal, environmental nature, among others, which may result in expropriatory measures such as expropriation, blocking, seizure, attachment or compulsory conveyance; • check whether there is any type of encumbrance hanging over the property that would make the transaction unfeasible, such as listing, inalienability, mortgage, fiduciary sale, among others; and • assess whether the individuals who owns the property and, in the case of legal entities, also their partners, have debts against them, whether judicial or not, that could lead to their insolvency and, consequently, imply the future cancellation of the business. •determine whether the nature of the activity to be carried out on the property requires obtaining special licenses, permits or authorizations; • investigate the possible need for reforms or special adaptations that require significant financial support; • examine whether the location, construction index, appreciation potential and market context, among other elements, recommend or not the acquisition for incorporation or investment; and • · calculate taxes and other charges applicable to the purchase or lease, determining the future maintenance cost. Real estate due diligence goes far beyond obtaining documents related to the property and negative certificates regarding its owners. This is a complex and multidisciplinary activity, which involves the application of a series of legal, economic, financial and architectural concepts, which are difficult for a single person to master. A true audit in which documents and information are collected and analyzed, producing conclusions that will determine the risk to which the buyer or tenant will be exposed in the negotiation. In this sense, it is important to seek specialized assistance to avoid losses when closing a real estate deal. Furthermore, it is essential to maintain the regularization of properties already acquired, preventing expired taxes, permits or licenses, among other inconveniences, from causing losses in other negotiations. PLBrasil Paralegal has qualified professionals and trained teams to provide full support to individuals and legal entities, including carrying out real estate due diligence. PLBrasil Paralegal also offers its clients, through its own platform, a document HUB, where all corporate documents and history are concentrated and permanently available, with constant monitoring of deadlines and obligations. Are you thinking of buying or renting a property? Before closing a deal, carry out a real estate due diligence.
How to cancel a protest?
As defined by law 9492/97, protest is the formal and solemn act by which default and non-compliance with an obligation originating in securities and other debt documents are proven. In practice, it consists of the act of using a third party (protest office) to collect a debt that has not been paid spontaneously by the debtor or after direct collection by the creditor. Debts subject to protest may arise from credit instruments (checks, duplicate invoice, promissory notes, bills of exchange, bank credit notes, etc.) or even from defaulted contracts. This default generates a negative entry in the debtor’s registry, making it impossible to obtain credit and invoice for purchases on credit, among other consequences. This cadastro ficaregistry is available for free public consultation through CENPROT (National Protest Center). Simply log in to the platform and enter the desired CPF or CNPJ, to obtain an immediate response on whether or not there is a protest regarding the individual or legal entity subject to the query, in all the notary offices in the country that are part of the system. The notary process cycle begins when the creditor seeks out the agency, presenting a instrument that materializes the debt and requesting its collection from the debtor. Once the formal requirements of the instrument have been checked, the notary’s office notifies the debtor so that, within a period of time that is generally three days, he can arrange payment of the debt. This notification is made by letter, which can be delivered by post or by a notary employee. Exceptionally, communication is done remotely (email or messaging app). And if the debtor is not contacted through their physical addresses or by electronic means, notification takes place through a notice published in a specific electronic newspaper. Once notified and the debt is not paid, the protest is effective. Once the protest is effective, however, the path of canceling it becomes more complex and expensive than it would be if the debt were paid off immediately. It is important to emphasize that payment of protested debts does not take place at the protest office, and it is necessary to make payment directly to the creditor, obtaining formal proof of payment called a letter of consent. This document, in short, is a statement made by the creditor, informing that the debt subject to protest has been paid off, which includes a series of formalities, such as the instrument number, identification of the parties, the amount of the debt, among others. It is also necessary to investigate with the notary’s office whether there are other formal requirements, such as the use of pre-formatted models or the authentication of signatures. If the debtor is unable to locate the creditor to negotiate the settlement of the debt and obtain the letter of consent, it is possible to request the cancellation through legal action, in which the Judge will request the creation of an account to deposit the debt and will issue an official letter authorizing the cancellation of the protest. In any case, in addition to paying the debt, it will also be necessary to pay the notary fees. And once all the requirements have been met, one must wait the necessary time for the negative entry to be removed from the system. Participation in bidding processes and obtaining credit from the financial system are two concrete examples in which the existence of protested instruments can represent an obstacle for the company. It is therefore essential that there is constant monitoring so that the appropriate measures can be taken to settle the debt and subsequently cancel the protest as quickly as possible. In this sense, PLBrasil Paralegal has qualified professionals and trained teams to provide all the support regarding the type of registration necessary for the constitution and operation of your company, including monitoring and resolving problems related to protests. Furthermore, it offers its clients, through its own platform, a document hub, where all corporate documents and history are concentrated and permanently available. Having trouble canceling a protest? Consult our paralegal experts.
