Due diligence is an investigation of a matter, usually undertaken before signing a contract. In this case, it’s investigating a property before purchasing it.

If you’re buying a property through an auction, you need to do all your due diligence before auction day.

If you’re buying the property by negotiation, then you can wait to do your due diligence until you’ve put in an offer and it’s been accepted by requesting to insert a due diligence clause. Your lawyer may advise you on this.

Formal considerations for due diligence include:

A LIM report: LIM reports come from the local council. This can include things like resource and building consents, information on the land (for example, if the property is prone to flooding or at risk from erosion), the rates you’ll pay and information on sewage and stormwater drains.
A builder’s report: this will give you a heads-up about potential structural issues the house has, or could face in the future.
A valuation report: professional valuers will be able to give you a detailed picture of what the property is worth.
A certificate of title: this proves who owns the section of land the property is built on, how big the section is, and what you can and can’t do to it.
The property file: for homes that have been altered since their original completion, a property file (which you can request from the local council) will give more info on resource and building consents and correspondence about the home.
Property finance: part of your due diligence is getting pre-approval on your home loan.

It’s important to be really thorough with your due diligence so that you know exactly what you’re buying. Remember to discuss due diligence with your lawyer early on in the house-buying process and they’ll be able to make sure all bases are covered.

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