Due diligence and reporting to lender

You may also find the Searches and enquiries—overview and Due diligence and reporting—overview topics useful for details of the usual and additional searches, checklists on various due diligence and title issues.

This overview gives an outline of the due diligence process undertaken by the lender and borrower's solicitors in a real estate finance transaction.

The property and its associated rental income stream are key to the lender's assessment of the risk and their security in the transaction. Accordingly, lenders will usually insist on full property due diligence being undertaken. From a lender's point of view, in most cases, they are concerned with assessing the rental income of the property or 'income return' over the loan period and 'capital return', namely how much the property will grow in value over the loan period. Anything arising in due diligence which would affect value, income or security will be material to the lender.

Note that while in residential conveyancing, the borrower's solicitor is often instructed to act for the bank as well on a mortgage of residential property. In commercial real estate loans, the risk of a conflict