Real Estate Due Diligence in Latvia
Real Estate Due Diligence in LatviaUpdated on Friday 21st August 2015
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Latvia offers a lot of possibilities for private or commercial real estate purchases. The Latvian real estate market started to develop in 2000-2001, when many foreigners and nationals began to invest in real estate projects.
Considering the diversity of real estate properties in Latvia, it is recommended to perform a thorough due diligence investigation of the property or land lot to be bought. The due diligence investigation can bring forth all the relevant aspects regarding the building or land you are about to purchase.
The first step of buying a property in Latvia is choosing the asset you want to buy and signing a preliminary contract. When signing the preliminary contract, the buyer must pay 10% worth the price of the property, which will be retained in escrow.
You can contact our lawyers in Latvia for details regarding the taxes on Latvian property.
Due diligence process in Latvia
In Latvia, the due diligence process and the transaction are led by a notary. The due diligence process for Latvian properties, for private or commercial purposes, implies checking the following:
- the legal title of the property and if the seller is authorized to sell it;
- if there are encumbrances (lease contracts, mortgages etc.) regarding third-parties rights on the real estate properties;
- if the property belongs to a married couple, the seller must have the spouse’s approval to continue with the sale;
- if there are debts, such as utilities or taxes that have not been paid;
- the number of residents of the property.
All this information can be found in the Land Book Register. The buyer must know that land plots and buildings must be registered independently. Also, if the property to buy is not registered in the Land Book Register, the transaction cannot be completed until its registration.
Other Aspects when Purchasing Real Estate in Latvia
Apart from the legal aspects of the purchase, it is also important to have the asset checked by an architect for any construction errors and, in case of older buildings, it is highly recommended to have the structure of the building thoroughly verified.
After all verifications have been made and the seller and the buyer come to an agreement, the notary will draft the contract of purchase or the final deed that both parties must sign in front of the notary. The whole process of registering a property in Latvia takes up to 18 days.
If you want to buy a property or start a business, our law firm in Latvia can provide legal assistance.