Buying property is a major financial decision.
Whether the property is residential, commercial, industrial, rural or mixed-use, a careful purchaser should carry out proper checks before exchanging contracts or becoming legally bound. These checks are often called “due diligence”. In simple terms, due diligence means finding out as much as possible about the property, its risks, its legal status and its true cost before committing to the purchase.
A prudent purchaser should first review the contract for sale and all attached documents. In New South Wales, this usually includes the title search, plan, zoning certificate, drainage diagram and other required documents. The title search shows who owns the property and whether there are any mortgages, easements, covenants or restrictions affecting it. For example, an easement may allow a neighbour or authority to use part of the land for access, drainage or services. A covenant may restrict what can be built on the property.
Planning and zoning checks are also important. The local council zoning will indicate what the land can be used for, such as residential, business, industrial or rural purposes. A purchaser should check whether their intended use is allowed. For example, a buyer wanting to run a warehouse or childcare centre should not assume the property can legally be used for that purpose. Council records may also reveal development approvals, building notices, heritage restrictions, flood controls or bushfire controls.
Physical inspections are essential. For residential property, this usually includes a building inspection and pest inspection. These reports may identify problems such as structural movement, water damage, termites, roof defects or unsafe wiring. For commercial or industrial property, more specialised reports may be needed, including fire safety, asbestos, contamination, mechanical services, air-conditioning, lifts, drainage and electrical systems. Industrial land may require environmental investigations, especially if it has been used for chemicals, fuel, manufacturing or waste storage.
A purchaser should also check boundaries and access. A survey can confirm whether buildings, fences, driveways or retaining walls are properly located within the property boundaries. This is important if there are shared driveways, laneways, encroachments or unclear fence lines.
For strata property, the purchaser should obtain and review a strata inspection report. This may show the financial position of the owners corporation, past disputes, building defects, special levies, insurance and planned works. A cheap unit may become expensive if major repairs or special levies are expected.
If the property is leased, the lease documents must be carefully checked. The purchaser should understand the rent, lease term, options to renew, outgoings, rent reviews, bonds, guarantees and any tenant disputes. For commercial property, the quality of the tenant and the reliability of the rental income are often central to the value of the property.
Other important checks include finance approval, stamp duty, GST, land tax, council rates, water rates, insurance and settlement adjustments. Purchasers should also confirm whether any fixtures, equipment or licences are included in the sale.
Thorough due diligence helps a purchaser avoid costly surprises. It may also provide grounds to renegotiate the price, request repairs, require further documents, or decide not to proceed. The key point is simple: before buying, know exactly what is being purchased, what it can be used for, and what risks come with it.