Buying property is one of the biggest financial decisions most people will ever make. Whether the property is residential, commercial, industrial, rural or mixed-use, a careful purchaser should carry out proper checks before exchanging contracts or becoming legally bound. These checks are often called due diligence. In simple terms, due diligence means finding out as much as possible about a property, its risks, its legal status and its true cost before you commit. Taking the time to do this well is one of the best ways to protect what is often a very significant investment.

What is due diligence?

Due diligence is the process of investigating a property before you are contractually bound to buy it. The aim is straightforward: before buying property, you should know exactly what is being purchased, what it can be used for, and what risks come with it. Good due diligence helps you avoid costly surprises, and it can also give you grounds to renegotiate the price, request repairs, ask for further documents, or decide not to proceed at all.

Review the contract and title

A prudent purchaser should first review the contract for sale and all attached documents. In New South Wales, the contract must include a number of prescribed documents. These commonly include a title search, the plan of the land (such as a deposited or strata plan), a planning certificate (issued by the local council, and often called a zoning certificate), a drainage or sewerage diagram, and documents relating to any dealings that affect the land.

The title search shows who owns the property and whether there are any mortgages, easements, covenants or restrictions affecting it. An easement, for example, may allow a neighbour or an authority to use part of the land for access, drainage or services. A covenant may restrict what can be built on the property. Understanding these matters early helps you avoid buying land that cannot be used the way you intend.

Check planning and zoning

Planning and zoning checks are equally important. The local council zoning indicates what the land can be used for, such as residential, business, industrial or rural purposes. A purchaser should confirm that their intended use is allowed. Someone wanting to run a warehouse or a childcare centre, for instance, should never assume the property can lawfully be used for that purpose.

Council records may also reveal development approvals, building notices, heritage restrictions, flood controls or bushfire controls, each of which can affect how the property can be used, developed or insured.

Inspect the property

Physical inspections are essential. For residential property, this usually includes a building inspection and a pest inspection. These reports may identify problems such as structural movement, water damage, termites, roof defects or unsafe wiring.

For commercial or industrial property, more specialised reports may be needed. Depending on the property, these can cover fire safety, asbestos, contamination, mechanical services, air-conditioning, lifts, drainage and electrical systems. Industrial land may also require environmental investigations, particularly where it has previously been used for chemicals, fuel, manufacturing or waste storage.

Confirm boundaries and access

A purchaser should also check boundaries and access. A survey can confirm whether buildings, fences, driveways or retaining walls are properly located within the property boundaries. This matters a great deal where there are shared driveways, laneways, encroachments or unclear fence lines, any of which can lead to disputes after settlement.

Additional checks for strata property

If you are buying into a strata scheme, obtain and review a strata inspection report. This may reveal the financial position of the owners corporation, past disputes, building defects, special levies, insurance and planned works. A unit that looks affordable can become expensive if major repairs or special levies are on the horizon.

Additional checks for leased property

If the property is leased, the lease documents must be checked carefully. You should understand the rent, the lease term, any options to renew, outgoings, rent reviews, bonds, guarantees and any tenant disputes. For commercial property, the quality of the tenant and the reliability of the rental income are often central to the value of the property.

Budget for costs and other matters

Due diligence is not only about the property itself. It also involves understanding the full cost of the purchase and confirming what is included. Other important checks include:

• finance approval;
• transfer duty (stamp duty);
• GST, where it applies;
• land tax, council rates and water rates;
• insurance; and
• settlement adjustments.

You should also confirm whether any fixtures, equipment or licences are included in the sale, so there are no misunderstandings at settlement.

Why it matters

Thorough due diligence helps a purchaser avoid costly surprises and make an informed decision with confidence. It may provide grounds to renegotiate the price, request repairs, require further documents, or walk away from a purchase that is not right. The key point is simple: before buying, know exactly what you are buying, what it can be used for, and what risks come with it.

For more than three decades, Western Sydney purchasers have trusted us to guide them through property acquisitions large and small. We know what to look for, and we help you understand exactly what you are buying before you commit.

Contact our experienced team to discuss your situation.