Who is the Developer
If it is a Company, find out the names of the directors, request for the Company’s CR12 which is a legal document from the Registrar of Companies that indicates the names of a Company’s Directors.
Credibility of the developer’s Directors
Carry out some level of background check on the Directors:
- their Profession – are they members of any professional body especially bodies that uphold a high level of professional ethics
- their Career history – previous employers or companies they have owned
The Developers Offices
Ensure to visit the developers offices to ensure you are not dealing with a briefcase company.
Prior projects done by the developer
Visit the developers’ previous projects
Testimonials from investors in the developer’s previous projects will provide you with a better understanding of the developer.
Legal due diligence
Confirm ownership of the proposed land to be developed, request for a copy of the Title Deed and confirm ownership. In instances where transfer of the Title to the developers Company has not been finalized, you can request for a copy of the signed transfer documents.
Location, Location, Location.
Visit the actual location that is the site where the developer is scheduled to construct
Request to speak to the developer’s lawyer
The Investment process
Review the entire investment process and the ultimate ownership documents you will receive. For example:
- Step One – You should receive an offer letter after which you pay deposit which could range from 10% to 30% of the purchase price
- Step Two – once you have paid the deposit and signed off the offer letter, you should receive the sale agreement which stipulates the terms of the sale. Some of the terms in the sale agreement include:
- the payment terms – for off plan projects, it is recommended that you pay over the construction period, with the final payment of say 10% made after completion of the project.
- the period within which the developer should have completed construction, specific provisions of the actions the buyer should take in the event the developer fails to comply with any provisions of the sale agreement.
- the ownership documents that the buyer should receive upon completion of the development. For most apartment developments you should expect to receive a sub-lease.
Engage a Lawyer
As a buyer, it is recommended that you should have your Lawyer who can review the provisions in the offer letter and the sale agreement on your behalf and conduct the due diligence process.