BUYING & SELLING

SOLUTIONS

DUE DILIGENCE ASSISTANCE

By assimilating entire portfolios or larger samples, our reports enable lawyers to report even more fully and cost effectively on matters of ownership and use. Time saved is then used to focus on individual assets requiring further attention and the broader commercial aspects of the transaction.

Our reports are routinely combined with an insurance policy, automatically produced to address any common title defects revealed by the data.

 
CLS’s panel of carriers enables us to insure sums of up to GBP 270 million of AA- and A rated paper. Additional capacity is drawn upon for larger cases.
See ERGO, AEGIS and AMTRUST for their current financial standing.
Additionally, we specialise in providing supplementary coverage to protect against consequential loss flowing from title defects.
Due Diligence Assistance is the combination of electronic title and property data and insurance designed to assist buyers and their advisers in determining the sum of insurance coverage necessary to address actual exposure (confirmed by data) rather than perceived exposure (created by sampling).
Due Diligence Assistance is a fast and robust alternative to sampling (or can be used to increase the size of sample significantly without delaying matters); it provides buyers with a high level understanding of the quality of title to an entire portfolio and the cost of insurance solutions available to address risks that are present in the portfolio.
We identify common sources of risk relating to ownership and use of property. Our IT platform delivers electronic information that informs you and enables us to offer cost-effective and targeted insurance for common title defects that are present in the portfolio.
Our product is intended to facilitate transactions by managing high volumes of data, allowing buyers and their lawyers to focus legal due diligence on elements which will underpin a profitable acquisition.
Due Diligence Assistance informs a buyer of the risk to ownership and use (if any) of assets in a portfolio and allows the buyer to determine their Demands and Needs for insurance to address such risks.
The standard Portfolio Legal Indemnity Policy insures against market-standard heads of loss flowing from common title defects and risks. Our policy is designed and priced on actual risk present in the portfolio instead of sampling. Additional risks and coverage can be added (such as relating to leases or disputes).
Heads of loss include legal costs to defend and settle a challenge by a third party, costs and damages awarded against an insured, settlement costs, loss in market value or loss to the funder and various delay costs.
Our IT platform interrogates various data sets (from Land Registry, planning, highways data, to flood, and contamination). We identify all properties within a portfolio affected by title-related risk and undertake further review (when necessary) to confirm insurability under a Portfolio Title Indemnity Insurance Policy.
A schedule of properties in the portfolio to be assessed (full postal address and post code) is sufficient to instigate a Portfolio investigation.
Subject to the quantity of manual interrogation of the Due Diligence Assistance Report required to provide a quotation, it should be provided within 3-4 working days of original instructions. Dependent on complexity, a fixed fee is payable to cover costs of data incurred by CLS.
At present, we are capable of interrogating UK property portfolios.
CASE CONTEXT
The target was a company owning a portfolio of 240 commercial units in England. The focus of the transaction was the acquisition of 100% of the share capital in the Seller Company and purchaser wanted to manage the title due diligence process efficiently without relying on sampling.
SOLUTION
Using CLS’s title interrogation IT platform we were able to interrogate the registered titles to all 240 properties and cross-reference with complimentary data including planning records, highways data and claims and underwriting data within a few hours of instruction. We then supplied a report summarising title to the portfolio, identifying ‘red flags’ such as potentially onerous title-related matters (e.g. restrictive covenants and third party rights and access-related issues) as well as key ownership data. This included highlighting 2 “wrong pocket” properties (i.e. not owned by the target company despite being identified as an asset of the target company in the share purchase agreement) as well as a number of charges registered by banks other than the company’s current lender. We provided full understanding of the portfolio in a dramatically reduced time-frame, key ‘red flag’ data and cost-effective legal indemnity insurance to address common title-related risk priced by reference to actual risks identified instead of a sample.