Buyers should conduct extensive due diligence of the property. Usually the buyer will perform legal and technical due diligence; and if the seller is a legal entity, also full corporate, commercial, tax and financial due diligence. The usual procedure is for the buyer’s lawyers to prepare a list of documents which they would like to review to the seller’s lawyers.
First, the buyer’s lawyers will conduct a thorough investigation of the ownership title of the property held by the seller. This will include an extensive investigation at the Land Registry, as well as, if necessary, historical documents and deeds that will provide more information regarding the property. This documentation will act as a confirmation of the seller’s registered ownership, and provide important information such as whether the property is subject to encumbrances, which can have a significant impact on the buyer’s final decision to purchase the property. This documentation will also reveal whether there are registered lease agreements, limited property rights established in favour of third parties, court rulings and complaints before the court in regard to the ownership.
Pre-emption rights need to be checked. If they exist, the seller has to offer the property to the holder of the pre-emption right prior to concluding a sale and purchase agreement with a third party.
Additionally, the Cadastre Registry records will be reviewed to confirm that there are no discrepancies between the two registries. (With the entry into force of the new legislation in Republika Srpska (“RS”) land registers and cadastre are now together under the jurisdiction of the Republican administration.)
If the property being sold is under construction or already constructed, the buyer’s lawyer will request from the seller relevant permits and planning and construction consents.
Where the seller is a company, the buyer’s lawyers will perform corporate due diligence, including corporate searches of the seller at the Companies Registry (in BiH referred to as Court Registry attached to relevant Courts) to ascertain whether or not the company is duly registered or solvent and therefore able to dispose of its assets freely. The seller will also be asked to disclose information on material agreements and disputes. Full financial and tax due diligence is usual.
Where the information and documentation provided is not complete or is inconclusive, the buyer’s lawyers will usually ask additional specific questions of the seller’s lawyers, including in relation to practical matters, which may affect the property. The seller generally gives replies, which may be actionable if wrong or misleading. Usually the answers, as well as the general information obligation of the seller, are subject to a negotiated liability limit in the sale and purchase agreement.
During the due diligence process the buyer will often arrange technical surveys of the property.
Social Media cookies collect information about you sharing information from our website via social media tools, or analytics to understand your browsing between social media tools or our Social Media campaigns and our own websites. We do this to optimise the mix of channels to provide you with our content. Details concerning the tools in use are in our privacy policy.