Do I Need a Pre-Acquisition or Due Diligence Audit During Property Transactions?
A pre-acquisition or due diligence audit is carried out during the early stages of land and property transactions, or when site evaluations are conducted.
It helps to ensure that a fair price is agreed for both the buyer and the seller, and smooths the transaction process by identifying issues which may cause problems later. This reassures the buyer that there are no ‘hidden dangers’ in their purchase, while sellers are protected from potential claims once the sale is completed.
A Pre-Acquisition Survey can encompass other survey types, all designed to give vendors and buyers a detailed understanding of the property and any liabilities. Due Diligence Audits focus particularly on legal compliance and ensuring all the documentation needed is available. Due Diligence Audits are often an integral part of the information potential buyers will request, and so getting this done on a pro-active basis can make a big difference to the speed with which a transaction takes place.
Who can carry out one of these audits?
Normally, lawyers and financial advisors will be involved in the process, and it’s also wise to appoint an environmental advisor to identify issues which may affect the decision to invest. The process can be lengthy and require lots of research and paperwork, so engaging experts to carry out an audit will be more cost-effective and less likely to have omissions than attempting to carry it out yourself.
How is an audit carried out?
Any potential purchase involving development or re-development will benefit from an environmental audit. This will provide a thorough assessment, highlighting the risks and benefits to acquiring that piece of land. The audit will involve a number of stages:
- Phase 1 Environmental Assessment
This involves reviewing historic data from sources such as the Landmark Information Group, government datasets and local authority data. This allows your environmental consultant to inform you of any risks or values of environmental assets and resources. The research will also identify any risks from previous land use, such as industrial activity. This helps in the valuation of the property and what may need to be considered in future redevelopment.
- Site visit
This physical inspection will look at the site and its surroundings.
A clear report will be produced, detailing the key issues which may affect the valuation or marketing of the site.
- Follow-up technical investigations
Further investigations can be carried out if necessary to help in valuing the site. This could be assessing the flood risk of an area, carrying out ground investigations to assess the erosion risk and assessing pollution or ecological risks.
Why should you use an environmental consultant for your audit?
An environmental consultant will have previous experience of carrying out this kind of work, allowing them to recognise pertinent information and identify relevant sources more quickly. They are also used to working with lawyers and financial advisors to compile a cohesive audit document.
Using an environmental expert early in the process will also alert you to potential problems in the transaction process, allowing you to act quickly and avoid costly delays.
You can also be assured that the information provided in the audit is of high quality and is reliable – critical in a process where inaccurate information can have huge repercussions.
To discuss your project requirements, please contact our experienced team