When venturing into the world of commercial real estate, legal due diligence is a crucial step that cannot be overlooked. This process involves a comprehensive review of various legal documents and considerations to ensure that the property acquisition is conducted smoothly and securely. Let's take a closer look at the usual legal due diligence process involved in acquiring commercial real estate.  

Review of Title Deeds:  

The first step in legal due diligence is to inspect the original title deeds of the property. This involves examining the terms of the documents, verifying if they have been registered, and identifying any encumbrances such as mortgages or liens. Lease terms are also carefully scrutinized to ensure compliance with legal requirements.  

Searches and Online Investigations:  

Conducting searches in the office of the Sub-Registrar of Assurances is essential to ascertain if any other documents or notices have been registered apart from those provided for inspection. Online searches are also conducted to identify charges on properties registered with the Registrar of Companies and to gather information on litigation status and director disqualifications.  

Examination of Revenue Records:  

Reviewing revenue records related to the property is necessary to understand its ownership and any associated liabilities. This helps in ensuring that there are no outstanding dues or disputes related to the property.  

Publication of Public Notice:  

Publishing a public notice in local newspapers inviting claims within a specified period is a standard practice in legal due diligence. This allows any interested parties to come forward and assert their claims, ensuring transparency and mitigating the risk of future disputes.  

Requisitions and Inquiries:  

Making inquiries with the seller about third-party claims, oral or written agreements, past and pending litigations/arbitrations, attachment orders, income tax proceedings, and persons in occupation of the property is crucial to identify any potential legal issues or liabilities associated with the property.  

Consideration of Survey Reports and Statutory Restrictions:  

Reviewing survey reports and plans of the property helps in understanding its physical characteristics and boundaries. Additionally, consideration of statutory restrictions on the permissible use of the property, such as coastal zone regulations and development control regulations, is essential to ensure compliance with applicable laws.  

Permissions and Compulsory Registrations:  

Identifying if permissions from other parties or authorities are required is important to avoid any legal hurdles in the future. Searches are also conducted to ascertain any compulsory registrations of developers/projects under relevant laws, such as the Real Estate (Regulation and Development) Authority Act 2016.  

In conclusion, legal due diligence plays a crucial role in the acquisition of commercial real estate by ensuring that buyers are well-informed about the legal status of the property and are protected from potential risks and liabilities. By conducting a thorough review of legal documents and considerations, investors can make informed decisions and navigate the complexities of the real estate market with confidence and clarity.