AC Realtors - discussion on other board

[martinbsmithjr]

Whatever I said was truthful but I wasn't trying to do a complete essay on all the intricacies of buying property in Belize. If I had that would have been very presumptuous of me since I have only ever purchased two properties (a house and a beach front lot). For the sake of clarity I did work with a real estate agent and in fact was so pleased with his service and integrity that I used him for the second purchase. In both cases I engaged a Belize lawyer to handle real estate transaction and had my Florida lawyers generally oversee process with a view to my tax and asset protection needs. I do think that an escrow agent (usually a bank, trust company or law firm in the US but there are actually specialists that are only that - escrow agents) is a much better alternative to simply using the real estate agent to close the transaction. This is not to say that there is anything wrong with any particular agent but it is only prudent to use a facility that will be there should any one person die or become incapacitated before the transaction is completed. I am a believer in Murphy's law that whatever can go wrong will go wrong and I comport myself accordingly as I can't afford to lose a big pile of money trying to save a few dollars.

I stand by my previous statements.  I don't know what your particular needs or issues are but I would be happy to answer any specific questions you may have regarding my experience(s). Feel free to email me.

[Inplub]

Thank you for your offer, but like I said before I was very happy with your answers before.

[peterbj7]

I don't know what "due diligence" means in the USA but in Britain it has a very specific meaning, and it doesn't mean "research diligently before you buy".  It refers to the fact that with most businesses you don't have access to the key operating data of the business until after you have taken over and have unrestricted access to the books.  So "due diligence" provides (contractually) a period AFTER acquisition during which time you can renegotiate the deal, or (depending on the terms agreed before purchase) even pull out together.  I have never heard of "due diligence" being applied to a simple house purchase, though I suppose it could be introduced in a large and complex sale of an estate containing many houses.

[deadserious]

I have never heard of "due diligence" being applied to a simple house purchase, though I suppose it could be introduced in a large and complex sale of an estate containing many houses.

"Due Diligence" is essentially as you described in the US, however the term has been unformalized to be used in many life situations.  

For example, long before The Vet and Pedro coupled up, you might have overheard him say... "I should have done my due diligence before I shagged that one".

[martinbsmithjr]

Peter, due diligence in the US usually refers to the research done before consummating the transaction and does include examination of many aspects of the entity you are going to purchase. The closing of the deal is subject to the due diligence being done and does give the purchaser access to very private and confidential information and in many ways could be considered a pre-purchase audit. The purchase contract very often includes both indemnities and warranties given by the seller to the buyer and these are often backed up by a withhold of some or even all of the purchase price that is held by an escrow agent which usually a bank or trust company. In publicly held companies there is also a quiet period during which none of this can be spoken of or made known.

[peterbj7]

I often think it should be applied to politics.  Just as with a business you don't know what's really been going on until after you take over, we don't know the full extent of the lies perpetrated by a politician before he wins, nor those of a political party before it takes power.  We should have the option of rescinding the election at any time in the (say) first three months if it becomes clear we were sold a packet of poo.

[martinbsmithjr]

Wouldn't do you Brits any good. You got Gordon Broooooon without an election!

[GOD]

Due diligence for a simple real estate transaction would generally include the contingencies of the agreement such as a re-survey of the property in order to verify encroachments as well as location and dimensions, a title opinion to verify that the property is free and clear and that the seller has no judgements pending or otherwise, mechanical/structural inspection to verify that what you are buying is sound and in good working condition. In a business sale it would include a close look or audit of the financials as well as other aspects of the transaction.

1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to a sale.

2. Generally, due diligence refers to the care a reasonable person should take before entering into an agreement or a transaction with another party.

I think that the above should clarify it.

[peterbj7]

What then is the British version of Due Diligence called in the USA?  I cannot believe that the concept doesn't exist.  In fact, in my dealings with US companies involved in takeovers, Due Diligence in the British sense most certainly was provided for and did occur.

In most business transactions other than trivially simple ones it is not possible to discover reliably all the facts you would wish to know about a business.  It is all too easy to obfuscate or even falsify the records in such a way that a completely misleading impression of the business is gained, and no amount of "independent audit" can overcome that.  Only once the buyer has full unrestricted access to the books and records is he in a position to determine just what it is he has bought.  I have been involved in a number of multi-million dollar takeovers, in a number of which at least one end of the transaction was in the USA, and in every case bar one there was a process of due diligence after the transaction had happened and the new people were in control.  In that one case the buyer chose not to go that route and fell very hard on his face.  I also have in mind a takeover here in San Pedro when there was no such due diligence and it was clear to the purchaser within days that he had bought a pup.