How to Conduct a Complete Real Estate Due Diligence Before Buying a Property

Real estate due diligence is the technical and legal verification—covering title records, tax matters, urban planning, environmental aspects, and litigation exposure—aimed at confirming whether a property can be safely acquired and registered, and whether there are liens, restrictions, hidden liabilities, or risks of asset loss and future disputes.

In practical terms, due diligence is what separates an “apparently good deal” from a legally secure acquisition.

Below is a comprehensive roadmap (with checklists), applicable to residential, commercial, and land transactions, with adjustments depending on the specific asset and risk profile.

What exactly must be verified in a real estate due diligence?

A complete real estate due diligence is structured into seven layers:

1.       Title deed and chain of title (Real Estate Registry Office)

2.       Seller analysis (capacity, authority, and asset/litigation risk)

3.       Tax and fiscal situation

4.       Urban planning and building compliance

5.       Condominium matters and ordinary expenses (if applicable)

6.       Lease, possession, or occupation status (if applicable)

7.       Environmental risks and administrative restrictions (when applicable)

If any of these layers fails, the risk is not merely theoretical: it may result in an inability to register the deed, financial losses, asset freezes, nullities, or even eviction.

Which registry documents should be requested, and what should be analyzed in the title?

Minimum registry checklist:

·         Updated title deed (preferably recent)

·         Certificate of liens and real or reipersecutory actions, when applicable

·         Review of the full registry history (prior transfers, subdivisions, mergers, and rectifications)

What to verify in the title deed:

·         Ownership: identification of the owner and any co-owners

·         Liens and encumbrances: mortgages, fiduciary liens, usufructs, attachments, unavailability orders, easements, restrictive clauses

·         Relevant annotations: construction records, occupancy permits (where locally registered), demolitions, mergers, and area rectifications

·         Inconsistencies: sale by a non-owner, area discrepancies, missing construction records (when required), or restrictions preventing transfer

Key point: the title deed is central, but it does not replace the analysis of the seller and the factual context of the property. A secure transaction results from the combination of title + seller + facts.

How to verify whether the seller can transfer the property safely?

This is where many transactions fail after execution.

Seller checklist – individual:

·         Marital status and property regime (spousal consent when required)

·         Legal capacity (interdiction, guardianship, or representation issues)

·         Powers of attorney (if applicable): scope, validity, revocation, and fraud risk

Seller checklist – legal entity:

·         Articles of incorporation/bylaws and amendments

·         Authority of the signatory and required corporate approvals

·         Verification of proper representation by the competent officer

·         Corporate disputes that may later challenge the transaction

Judicial and asset-risk checklist (essential):

·         Lawsuits capable of affecting the seller’s assets

·         Enforcement proceedings, insolvency, bankruptcy or judicial reorganization (for companies)

·         Contextual risk of fraudulent conveyance or fraud against execution

The logic is straightforward: even a “clean” property can become problematic if the seller is involved in serious asset disputes. Depending on the facts and evidence, the transaction itself may be challenged.

Which tax documents and fiscal analyses are required?

Property tax checklist (minimum):

·         Property tax (IPTU or equivalent): outstanding debts, installment plans, and pending issues

·         Municipal fees, when applicable

·         Rural properties, as applicable: cadastral status and related taxes

Seller tax exposure (risk-based):

·         Relevant certificates and searches to assess whether existing liabilities may reach the seller’s assets and jeopardize the transaction

The rule is proportionality: the higher the transaction value, the stricter the investigation.

What must be checked with local authorities (zoning and building compliance)?

This stage is decisive to avoid acquiring a property that later proves impossible to regularize.

Urban and building compliance checklist:

·         Zoning classification and permitted use (especially for commercial or industrial assets)

·         Construction regularity: permits, approved projects, and “as built” documentation when required

·         Occupancy permit (habite-se), where applicable

·         Common issues: unapproved expansions, irregular annexes, change of use, setbacks, permeability requirements, computable area, parking spaces, and accessibility rules

For commercial buildings, warehouses, and industrial properties, additional operational requirements may apply. Due diligence must be calibrated to the asset’s operational risk.

Condominium matters: what to verify before acquiring a unit?

When dealing with condominium units, include:

Condominium checklist:

·         Certificate confirming no outstanding condominium fees

·         Status of approved extraordinary assessments (works and special levies)

·         Existing disputes: lawsuits involving the condominium, structural issues, or material liabilities

Condominium obligations are a frequent source of surprises and must be clearly addressed in the purchase agreement.

Possession, occupation, and leases: how to avoid delivery issues?

Possession checklist:

·         Is the property vacant or occupied? By whom, and under what legal basis?

·         Existing lease agreements: term, guarantees, default, right of first refusal, termination conditions

·         Key delivery: timing, conditions, and penalties in case of delay

For occupied properties, the transaction must establish clear conditions and a realistic timeline to ensure possession after closing.

What are the main red flags requiring heightened caution?

Certain signs demand enhanced scrutiny—and sometimes withdrawal:

·         Pressure to sign without full documentation

·         Area or description discrepancies without prior rectification

·         Relevant liens without a clear and feasible release strategy

·         Construction lacking minimum compliance where financing or use depends on it

·         Occupied property without a realistic legal plan for vacancy

·         Deals that seem “too good to be true,” combined with urgency and informality

How should the contract be structured to mitigate identified risks?

Due diligence is not only about identifying issues; it is about contracting better.

Common contractual risk-mitigation mechanisms:

·         Conditions precedent (closing only after lien release, regularization, or document issuance)

·         Retention or escrow arrangements

·         Seller representations and warranties, including liability for omissions

·         Covenants to perform (regularize, vacate, deliver documents) with penalties

·         Document delivery schedule, with defined consequences for non-compliance

·         Clear allocation of prior debts (taxes, condominium fees, utilities) and cutoff dates

The contract functions as the transaction’s security system and must reflect the findings of the due diligence.

Technical summary

A secure real estate acquisition is not one with a “clean-looking title,” but one in which ownership, absence of blocking liens, minimum compliance for use and construction, tax status, and seller risk are all confirmed—followed by a contract structured with appropriate conditions and safeguards.

This checklist can be adapted to different asset classes and transaction profiles, depending on the level of risk involved.