The term ‘Due Diligence’ is used in the Development industry when discussing purchasing a site (with or without an approval on it).
A definition from the Oxford dictionary is “Reasonable steps taken by a person to avoid committing a tort or offence.” And “A comprehensive appraisal of a business undertaken by a prospective buyer, especially to establish its assets and liabilities and evaluate its commercial potential.”
We at Norris Clarke & O’Brien over many years have seen many examples of due diligence carried out well or overlooked. There is always limited time to make a Decision on the purchase of a site that may be a great opportunity or a liability, depending on how much you can research before someone else decides to purchase. Norris Clarke & O’Brien’s attention to detail, experience and understanding of the planning system, has made it an ideal and trusted source for our clients with both new and long-standing associations.
Examples of things to consider are:
- Any current approvals and when they expire.
For example, it could be a landscape plan that only has a month until it expires.
All Development Permits should be obtained and their expiry dates checked. There may be approvals from other than the Local Government (Council), for instance the State and/or Federal Government.
Utilities providers such as Water and Sewerage and Electricity may have also set conditions.
There could be issues such as close to an oil pipeline or an Australian Defense force area.
- Local Government (Council) offer different types of searches, for example such as flood, rates, planning and development certificates.
Planning & Development Certificates searches are always recommended as they can identify conditions applying to the site and if they have bene complied with. Also, what Infrastructure Charges may have been charged and paid to date.
- The current planning scheme in force and if the approval/s are under a superseded scheme.
- Is a new planning scheme proposed or new policies for instance on Lot size or building height?
- Are there any incentives to provide certain type of development in the area such as student accommodation or aged care?
- Are there any Infrastructure Agreements in place and/or credits/offsets for Infrastructure Charges?
- Is there a trigger in the conditions for certain works? For instance, a future Lot could trigger major externalroad upgrades.
An example of a recent case where the purchaser of a Lot, relied on a planning certificate from a Council in NSW shows how doing due diligence can still have unknows.
“The plaintiff homeowner sued Council for negligent misstatement and nuisance for failing to disclose the existence of an underground stormwater pipe on a planning certificate issued prior to purchase. The pipe ultimately became blocked, resulting in stormwater inundation to the property. “