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School land and premises: due diligence for academies transactions - the options

01 May 2012

For schools looking to convert to academies status, it is important to understand the options in terms of the levels and types of land and premises due diligence that should or could be carried out.

Once the school becomes an academy and the new 125 year lease granted or the freehold interest acquired, the new academy or the federated provider will be the new owner occupier of the school site. However, with ownership and occupation come responsibilities, duties and liabilities Getting the level of land and premises due diligence right is important for all conversions, but perhaps particularly so for a federated academy provider bringing a new converter school into its group of existing academies. Like any prospective purchaser, or tenant, the federated provider will have relatively little knowledge of the school site and matters affecting it, as compared to straightforward academy conversion.

For academies projects there are broadly four applicable levels of property due diligence which may be carried out by the party acquiring an interest in land, with Level 1 being the least and Level 4 the most extensive.

As a preliminary point, and premises due diligence is broadly comprised of three main elements:

  • Title due diligence (analysis of the registered title and/or unregistered title documents relating to the land in question, and assessment of any leases held by the school);
  • Searches (there is a very broad range of information-providing property searches that can be undertaken); and
  • Enquiries of the landowner (standard form enquiries and site or project specific enquiries)

The key point with land and property due diligence is that the landowner has very limited obligations to provide information about a site and so the buyer or tenant must undertake it own investigations.

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