When due diligence doesn’t work

due diligence
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The need for property investors to undertake due diligence can never be underestimated, but sometimes even the deepest investigation is not enough.

Anyone, even experienced legal firms, found nothing untoward with one high-profile project that ultimately ceased construction a while ago.

The exact details of the project in question are withheld to protect the identity of someone with knowledge of the situation who wishes to remain anonymous.

The due diligence undertaken at the time would have found the property had entered into a joint-venture agreement with an established British firm.

That firm undertook its own research on the company and its staff prior to entering the arrangement and found nothing wrong.

Further due diligence would have discovered the project had the necessary permits and Environmental Impact Assessment in place.

A large, Asia-based bank also did its own due diligence prior to granting substantial funding for the development.

“The due diligence took between three and four months and was checked multiple times by local and international lawyers,” the source confirmed.

Sadly, and despite successful sales, the project ceased construction with former staff still unable to understand exactly why it failed.

The source added that the experience has been damaging and hurtful for everyone involved, from the staff, buyers, investors, the development company, its partners and even the bank.

Whilst due diligence is able to highlight almost everything, clearly the investigations undertaken at the highest business levels on this occasion, and more in-depth than any single investor is able to achieve, is not able to spot everything.

When buying property anywhere in the world, normally the relatively insignificant cost of due diligence compared with the total investment cost, really is a small price to pay for peace of mind.

Andrew Batt
The author of this article is Andrew Batt, the founder and editor of www.thailandproperty.news. Andrew has been writing about property and real estate issues in Thailand and Southeast Asia for more than 10 years. He has worked for PropertyGuru Group, DDproperty, Dot Property Group, Hipflat and AsiaRents. He has also produced content for leading Thailand property developers and real estate agencies.
Email: andrew.thailandpropertynews@gmail.com.

1 Comment

  1. That’s the danger of buying off plan in Thailand. Anything can go wrong and when it does there is often very little chance of getting your money back. “Guarantee” translated from English language into Thai language and then back to English language means absolutely nothing at all.

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