The hurdles confronted by parties on the buy-side of a property transaction are rather high when conducting a due diligence on the property in question. It's akin to entering an uncharted territory for which there is no map or compass.
When conducting a due diligence on the property the intention is to identify:
All parties involved in the property from its inception and who the buyer should be contracting with,
What role the parties played in the property and should any of them still play a role in the proposed transaction with the intended buyer,
The tenure involved in the property and what’s available for the intended buyer to enjoy,
The actual size available for disposal to the buyer,
Interest(s) in the property other than that of the intended seller,
Inevitably the aforementioned list is by no way exhaustive, but nonetheless essential, if the buyer is to source all the information needed to make an informed purchase.
On the face of it, sourcing all the relevant documents (deeds, contracts, registrations etc…) from the seller ought to be quite straightforward. However, poor document preparation and management has resulted in this process being the most time consuming and tasking. Issued arising include:
Documents are not stored in a central location,
Documents in hardcopy as opposed to digital requires close physical proximity to the document,
Mixed drafts and originals in a single file consumes time as buyers have to sort through what is relevant from is not,
Documents are with multiple parties as opposed to one,
Sellers' reluctance to disclose all relevant information and instead drip feed the supply of documents.
The list of issues goes on and on. The result of this inefficient manner of storing and managing sell-side documents is a buy-side due diligence that consumes an unnecessarily long period of time, with lots of repetitive tasks and incorrect data for the buyer to consume.
The way forward is quite simple using today's cloud technology. Sellers can securely and cost effectively assemble and store all relevant documents relating to the property in the cloud and give access per demand to buyers to conduct their due diligence. This means digitising all relevant documents relating to the property in question and thereafter uploading it to a secure cloud location which can be accessed using the internet. Buy-side access can be monitored using sign-in and permissioning. This requires all buyers to have their own username and password, and the view of files can be restricted to on-screen view only, or on-screen view and print, or on-screen view, print and download. Using information rights management, documents downloaded can always be deactivated when buyer access is no longer permitted. All this the seller can do at a reasonable cost.
The aforementioned means all relevant property designated documents can be found in a singular location with a singular custodian. In addition, the seller is also assured of being able to determine who to admit to view the documents and can track when the documents are viewed, opened, printed or downloaded. This reduces the back and forth between seller and buyer and the seller is able to quickly weed out the buyers that are simply fishing from the serious buyers that have serious intent.
On the buy-side a due diligence tool such as an AI tool can fast track the process and make it even more efficient especially if a Q&A (Question and Answer) tool is included in the mix. I have found Artificial Intelligence tools that can probe the cloud in which the title documents are stored to do the heavy lifting of identifying what is relevant to the buyer from what is not.