The construction due diligence process
The construction due diligence process

The following Construction practice note provides comprehensive and up to date legal information covering:

  • The construction due diligence process
  • What is construction due diligence?
  • Steps in the process
  • Sale and purchase agreements (SPA)
  • Completed buildings
  • Incomplete buildings or subject to rectification of defects—practical completion has been achieved
  • Incomplete buildings or subject to rectification of defects—practical completion has not been achieved

This Practice Note looks at the construction due diligence process and how a construction lawyer will be involved where a client is buying a property or where it is buying a company whose assets include properties. It also introduces the key issues to consider when drafting construction clauses for a sale and purchase agreement, depending on what stage the relevant construction works have reached.

What is construction due diligence?

When a client is proposing to purchase a property (or properties) or purchase a company, whose assets include properties, due diligence will need to be carried out to ensure that the properties are sound and that 'good title' can be obtained.

Where the property in question contains a building which was built less than 12 years before, or where a substantial amount of construction work was carried out at the property within the past 12 years, it is advisable that full due diligence of the construction documentation is carried out.

In addition to carrying out a survey of the property to assess its condition, the purchaser should instruct professional advisers to carry out a full review of the construction documents for the construction work carried out. A construction professional should be engaged to review the technical documents in order to assess the quality of the design and specification. In addition, a construction lawyer should carry out a full review

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