Context
The client approached us with a plan to implement a development project in the center of the city. They had found a property that was currently being used as a dormitory. The seller claimed that financing would not be a problem, and that renovation and building permits were already in progress. They even provided visualizations of the project and a forecast of future apartment sale prices. The client wanted to verify the project’s feasibility, so we began working together.
Task
- Conduct an independent analysis of the project and verify all provided documents.
- Verify the feasibility of the projected sales prices in the current market.
- Verify the property's legal and construction status – renovation, building permit.
- Assess the project's profitability from the perspective of bank financing.
- Inform the client of the real risks and recommend further steps.
Legal and financial approach
- We analyzed the current sale prices of apartments in České Budějovice and compared them with the seller's calculations.
- We found that the expected sale prices were significantly overestimated.
- Based on photographic documentation, we concluded that the renovation costs were in line with the seller's estimates.
- However, when we checked the cadaster, we found that, although the renovation had been submitted, the building permit for the attic conversion had previously been rejected.
- We had previously submitted the project to the bank for evaluation, and they also pointed out these risks.
Key point
The crucial issue was that a building permit for the planned attic conversion had already been rejected. This significantly reduced the project’s feasibility and profitability.
Result
- The client was informed of the project's real risks and overestimated calculations.
- Thanks to the timely analysis, the signing of a reservation agreement and the subsequent loss of financial resources could be prevented.
- The client avoided a risky investment and was able to allocate their resources more effectively.
“Without this analysis, I would have signed the project and risked significant financial losses. Thanks to the professional analysis, I realized that the seller had overestimated the project and concealed the risks.’
Legal and consulting areas
- Real estate law
- Banking and financial law
- Construction law
- Development projects
Keywords
#developmentproject #CeskeBudejovice #analysis #investmentprotection #buildingpermit
