Doing due diligence in real estate is an act of verification of all documents pertaining to the subject property.
Why do it?
As a real estate entrepreneur, it is paramount to do due diligence on properties you want to deal with to limit costly surprises along the way. Ideally, you only deal with “clean” properties specially for beginners. In doing due diligence, you accomplish the following: (1) a list of tasks you need to do to make the property “clean”, (2) a more precise timeline of your deal showing how much time you need to remedy each imperfection, (3) a better cost analysis including all the additional processes you have to do and most importantly, (4) peace of mind that the property won’t be swept from under your feet due to unforeseen circumstances.
Here’s an actual example of due diligence done for a vacant property in Quezon City for a client that will lease it long term.
Documents for request:
(A) Tax Declaration
(B) Tax Clearance
(A) At the Quezon City Hall, get the Tax Declaration first because it will be released on the same day (a few hours after filing).
At Window 10, fill up a request form with the TD number and the requester’s contact information. You will be given an assessment form with the processing fee (Php50 for 1 copy of Tax Declaration).
Pay at the cashier across the building.
Submit receipt to Window 11 along with a photocopy of your ID.
Wait a few hours (mine took 3 hours) for release.
(B) While waiting, the Tax Clearance can be requested on the second level of the main building. Show the following: Photocopy of Tax Declaration, Latest Tax Receipt or Clearance and SPA from property owner plus IDs.
If you don’t have a copy of the previous clearance or tax receipts, go to the Records Section within the same room and request for a copy. You will be given a transaction fee that you will pay at the cashier at the ground level. Processing fee is Php25 + 50. Give back the receipt of payment to the records section and wait for the release of tax receipts. I waited about 30 minutes.
You may then submit the tax receipt along with other documents to the Tax Clearance section. The lady at the table will fill up your form and check your documents. If complete, you will be given back all your documents with the filled up form (all stapled together) and given a number. Just wait for your number to be called at the receiving window. A few minutes later, you will be given an assessment form that you have to pay at the cashier in the same room. Give back the receipt and you will be given a claim stub. Processing fee is Php25 + 50. Document will be released in 3-4 working days.
(C) Go to LRA at East Avenue to request for a certified true copy of the Title (CTC of TCT). Retrieve form from the desk at the door. Fill up the form with the TCT number, property details and your contact info and submit to Window 1. You will be given a computation that will be paid at the cashier. Wait 5 working days for the release. Php273.50 for 3 pages. You can now go back to the city hall to retrieve the Tax Declaration.
Total time spent to request for tax clearance and title and request and retrieve tax declaration: 4 hours
Upon retrieval of documents next week, we will check if it has discrepancies with the initial documents provided by the lot owner. We will also check if there are any liens, encumbrances or any third party claims that we have to remedy that may affect my client’s right to use the property.