Due Diligence and Estoppels
About a year ago I learned of a huge real estate developer that was in such a hurry to close on a deal, they decided to forego asking for estoppels. While this practice is never recommended, it's safe to say that in a few occurrences, minor mistakes may be found, but fraud, not expectedly. In this case, the developer discovered after closing on a nice mega unit apartment building that the manager had cut deals with several of the existing tenants.
Tenants were told by the manager that if they paid him two years of rent in advance, rent for the third year would be waived. Surprisingly, when the client assumed ownership, the manager disappeared, and tenants balked when asked to pay rent.
Had the real estate developer performed proper due diligence and gathered the estoppels during the 30 day period prior to closing, they would have 1.) discovered the fraud perpetrated by the existing manager, 2.) possibly collected rents when they came due and 3.) saved several thousands of dollars in legal fees.
When you're serious about real estate due diligence, Ipsen Due Diligence should be your "Go-to" for onsite inspections, local and international, Financial Due Diligence, Physical Due Diligence and assistance with your Legal Due Diligence needs.