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Buyers must be fully aware of the risks involved when purchasing property from distressed sellers, warns Norton Rose real estate partner David Hawkins.

Speaking in the tenth and final Legal Week Crisis Management Q&A in association with Norton Rose, Hawkins says that a good price does not always mean good value if the risks connected with the property are not identified and reflected in the price.

Hawkins (pictured) said: “It is important that a buyer appoints a professional team which has the capabilities and experience to review the information in the timescales available, and either from this or from other available sources, identify any risks and provide advice as to the significance of the risks when compared to what one would normally expect when buying a property.”

Given the number of companies currently experiencing financial difficulties, property buyers could potentially be exposed by a seller who is entering into an insolvency process. In such cases, buyers must to find out if it is still appropriate to deal with the seller rather than an insolvency practitioner on behalf of the seller.

In particular, a buyer should check that no winding-up petition has been presented against a corporate seller.

After doing this, the buyer will then be in a position to decide whether the price it is paying sufficiently reflects the additional risk and whether the transaction represents good value.

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