The property market can be very lucrative. One method that developers have used for many years is to buy a “doer-upper.” These can be renovated and sold at a profit or rented.
In theory, this all sounds very straightforward. In reality, however, it can be a complicated business. There are several legal considerations that real estate developers need to consider before making a purchase. Outlined below are some important factors to keep in mind.
Zoning permissions
A derelict building with lots of potential may have come on the market for a reasonable price. It may not take a lot of money to renovate it. However, that building may not be as valuable as first thought if it is subject to zoning restrictions. For example, if the building is a former church, zoning restrictions may prohibit that building from being used for residential purposes. If you don’t consider this before purchasing the building and doing it up, you could end up losing money and having to engage in legal disputes. Not to mention facing a potential backlash from the local community.
Hidden defects
Before buying any property, it is important to conduct due diligence. This is especially important for properties that need to be renovated. Part of this involves conducting surveys and inspections. However, you are also reliant on the seller disclosing any pertinent information, such as structural damage, foundational issues or safety issues with gas and electrics. Should a seller hide defects, you could end up regretting the purchase and facing litigation to recuperate at least some of your investment.
Purchasing a “doer-upper” can be a great decision as long as you have first sought legal guidance to ensure that you are covered.