Sometimes basic due diligence can uncover things on a real estate deal that would otherwise open a can of worms and trigger a chain of actions that can become a major pain! Unfortunately, in real estate, from people who don’t accurately recount their information to out and out fraudsters, due diligence is one vital activity that is the burden of every real estate sales professionals.
Most real estate sales professionals, at the very least, when taking on a new listing will perform a property search to validate that their client is the legal homeowner. Now, some real estate sales professionals will go a step further to validate that the mortgages registered against a property match what the client disclosed at the time of engagement.
One very common thing that can come up on a new listing is an undisclosed mortgage or lien on the property being listed and depending on the amount borrowed/owed it could consume some or all of the property’s equity – in the worst circumstances, not even leaving anything left to pay commissions and closing costs.
Your due diligence may begin with a basic property search that could generate information that leads you to want to do some more digging. The next step in the evolution of due diligence in this regard would be to look at a Parcel Register*.
A Parcel Register* is going to tell you the legal owners and type of ownership, legal description, registered encumbrances – not exclusive to mortgages, these could be liens, easements and other types of registrations.
Should something solid be revealed on a Parcel Register* you can now go back to your client and question them. Perhaps there is a lien registered and they have the money to pay off the lien – but don’t have the contact information for the registrant.
The next step in the evolution of due diligence is to look at the Instrument Image associated to the registered lien in question. This will provide you with the registrant’s complete information including how to contact the registrant or their legal representative.
Next you may want to have a look at the sales history – particularly the amounts of transactions and who the buyers and sellers were.
Taking the basic measures above will ensure that you are spending your time working on good quality deals that have a high probability of closing which in the end makes you more profitable!
GeoWarehouse has the tools for both basic and more in depth due diligence. Ensure that you are covered – protect your own assets. Visit www.geowarehouse.ca today.
* An official product of the Ontario government pursuant to provincial land registration statutes.