Real estate due diligence: the price is negotiated, the risks are checked before buying

An apartment may have an excellent location, an apparently attractive price and paperwork that, at first glance, seems complete, yet still be unsuitable for the buyer’s intended project. It may be occupied under a contract other than the one envisaged, require unbudgeted works, contain an alteration never authorised, or fail to allow the subdivision on which the investment’s appeal depends. Due diligence, that is, the prior investigation of the transaction, is meant to bring these issues to the centre of the decision while there is still room to negotiate, ask for clarification or walk away. It does not certify that every risk has disappeared: it makes it easier to understand which risks exist, which checks support them and who will have to bear them.

The issue remains as relevant as ever: a sale and purchase transaction may meet the requirements needed for execution without offering, on that basis alone, certainty that the property is compliant in every respect, immediately usable or economically consistent with the buyer’s project. The preparatory work must connect what emerges from the documents with what exists on site and with what is intended after the purchase. It is in this relationship that a documentary review becomes a tool for protecting capital.

The checks must come before commitments that reduce freedom of choice

Putting everything off until the days before completion often means facing critical issues only after costs have already been incurred, sums paid and obligations assumed. Even an accepted offer can create contractual commitments before the signing of a document later called the preliminary contract: the substance matters more than the label. For this reason, initial checks and assistance with drafting the agreements must go hand in hand. Where the transaction needs to be made conditional on the outcome of investigations, the clause must be drafted for the specific case, stating the object of the inquiry, the documents to be obtained, the deadlines, the seller’s cooperation and the effects of a negative outcome or of an inability to complete the review. The generic formula “subject to successful due diligence” can leave unresolved precisely the issues over which the parties will end up arguing.

The scope changes with the objective. A buyer looking for a home needs to understand the conditions of use, the costs and the works required; someone buying a property to let must also examine availability, contracts and management costs; anyone wishing to convert a building into a hospitality structure must check the feasibility of both the works and the business. A report prepared for the sale of an apartment does not automatically answer the questions of an investor who wants to change its use. The project should be explained to the professionals before the checks begin, making clear which conditions are non-negotiable. Without this step, there is a risk of obtaining a file that is correct but incomplete in relation to the decision to be made.

Title and third-party rights require a coordinated reading

The first level concerns who is selling, what right they can transfer and which rights or claims may affect the property. Deed of title, entries in the land registers, powers of attorney, possible successions, mortgages, attachments, easements and judicial claims must all be read together. The cadastral record has a different function and does not replace the investigation of title. If the seller is a company, the review must include the powers of the person signing and the circumstances relevant to the transaction; if there are leases or other occupancy rights, future availability cannot be inferred from a mere promise to deliver the property vacant. It is necessary to understand what obligations are already in place and how they will actually be fulfilled.

Provenance by donation also calls for an updated reading today. Law No. 182 of 2025 has amended the protection of forced heirs and the position of third-party purchasers of gifted assets, overriding aspects of the previous system that affected property circulation. It is therefore not correct to repeat automatically the old descriptions of the risk of restitution; nor is it prudent to conclude that the word “donation” no longer requires any further analysis. The notary must identify the applicable regime, taking account of transitional rules, successions already opened and any relevant filings or disputes. The value of the check lies in applying the correct rule to the history of the asset, not in using the same reassurance for every chain of title.

The cadastre does not replace the reconstruction of building compliance

A cadastral floor plan matching the apartment viewed does not, by itself, prove that all works were lawfully carried out. The technical review must reconstruct permits, alterations and the state of the premises, assessing which discrepancies exist and which rules apply. The cadastral declaration required for certain acts and the urban-planning and building compliance check serve different purposes. The principle established by the United Sections of the Court of Cassation in judgment No. 8230 of 2019 also requires the levels to be kept distinct: the inclusion in the deed of a genuine building permit that relates to the property is not equivalent to certifying that every part of it is compliant. The validity of the transfer does not cure non-compliant works, nor does it make their effects on the purchase irrelevant.

The “Salva Casa” decree, converted into Law No. 105 of 2024, amended the rules on lawful status, tolerances and certain regularisations. The practical consequence is the need to classify the individual situation correctly: a recognisable tolerance, a discrepancy that may possibly be regularised, and an unlawful act for which the conditions for remediation are lacking are not the same thing. Simply filing an application does not authorise one to describe the problem as finally solved. The technician must explain the procedure, documents, conditions, costs and further checks, including those linked to restrictions and safety. For older buildings, finally, a declaration that construction predates September 1967 is not universal proof of legality: the obligations and rules in force at the time and place concerned must be considered.

Occupancy and intended use affect economic value

Occupancy must be examined by distinguishing between the absence of a document, the route through which it can be demonstrated or certified, and any lack of the substantive requirements. The certified report of occupancy concerns specific conditions and prerequisites; it is not a general cure for irregularities. Nor does its absence automatically entail nullity of the sale or, in any circumstance, termination of the contract. The consequences depend on the specific case, the suitability for use, the agreements and the obligations assumed. A buyer must know before committing what situation they are accepting, which works are necessary and what uncertainty remains, without relying on the open-ended prospect of sorting everything out after completion.

The same logic applies to a conversion project. Buying a house with the idea of creating two units does not mean one already has the right to subdivide it; buying an attractive building does not mean it can be used as a hotel. Zoning, technical requirements, access, facilities, local rules and restrictions can all affect timing and feasibility. The energy performance certificate, the plant documentation and checks on the construction status complete the picture, but they are not interchangeable documents. In Sicily, moreover, the analysis must coordinate national rules with regional ones: the transposition of the “Salva Casa” decree and the subsequent clarifications do not allow an online national summary to be applied indiscriminately to every case.

Condominium matters and restrictions can alter the attractiveness of a purchase

Part of the economic risk lies outside the rooms the buyer visits. The condominium regulations, meeting minutes, accounts, approved works, disputes and payment position can all foreshadow significant outlays or limitations. The manager’s statement must be read together with the other documents and updated close to completion: the current accounts balance does not on its own tell the full story of what has been resolved or discussed. The allocation of expenses between seller and buyer must also be expressly regulated, keeping their agreement separate from the rights the condominium may exercise. An attractive price loses some of its meaning if it does not include the financial commitments that accompany the property.

For properties of cultural interest, the review must include the protection regime, the works permitted and the formalities relating to transfer. In the national framework, notification and any public pre-emption follow specific rules and deadlines: the ordinary sixty-day period does not exhaust the regime, which provides for a 180-day period in cases of omitted, late or incomplete notification, subject to the relevant conditions. Before fixing payments, delivery and the start of works, it is necessary to verify the applicable procedure and the competent authority, including any territorial peculiarities. Historical value may support a building’s worth, but it does not remove the limits governing its transformation and circulation.

The final report must enable a decision

Useful due diligence does not end with a list of documents collected. For each issue it should make clear the fact established, the source, the check still missing, the consequences for use and value, any solution and the person tasked with implementing it. It must also be clear what has not been verified: a visual inspection is not the same as a structural survey, a preliminary estimate is not a quote, and the absence of a reply to a document request does not prove the absence of the problem. The lawyer, notary and technicians contribute according to their respective roles and expertise, coordinating information without automatically conflating responsibilities and checks.

The final decision may be to proceed, to revise the price and terms, to ask for an obligation to be completed before transfer, or to walk away. A hypothetical example makes the point clear: a €30,000 intervention does not necessarily translate into the same amount of discount if uncertainty over timing remains, along with higher financing costs and months during which the property produces no income; an obstacle preventing the planned use may make even a significantly reduced price unsuitable. The result of the investigation must therefore feed into the contract and the transaction’s economics. Assets are protected when one understands what is being bought before deciding how much one is willing to pay.