Due Diligence Assignment
Transcript of Due Diligence Assignment
MEMORANDUM
TO: Rachel Rawson FROM: Jones Day Associate DATE: March 24, 2014 RE: Potential property purchase, Cleveland Clinic, due diligence report, Preliminary Due Diligence The following memorandum discusses a preliminary due diligence investigation regarding the quality of the properties that the Clinic is interested in acquiring in the Cedar Avenue/Fairfax Area of Cleveland. Furthermore, this report intends that explore the characteristics of these properties so that the Clinic may adequately balance its risk and evaluate if the value of the purchase price matches the reality of the condition of that real estate. This report evaluates public documents and information readily accessible online, which found that at least two separate interests own the properties. My research was non-conclusive on most matters however; it did locate some useful cursory information. The public records that are available online are incomplete and one of the parcels (9908) is not listed with Cuyahoga County at all. Title The first step in this process is to determine if the purported owner’s have actual title to the properties. This is done with a title search through the County Recorder’s Office. Here, the owner’s names were not readily available and the given addresses did not trigger a result in the Recorder’s Online Property Search Tool. After a “Google” search of the addresses, I secured parcel numbers for two of the properties on private real estate websites (9904 and 9808). The last property (9908) did not have its own parcel number but the Clinic already owns some property in the area that does not display an address.
Address Parcel
Number Present Recorded Owner Last Recorded
Owner 9904 Cedar Ave 121-16-016 Fairfax Renaissance Development
Corp. Frances Cole
9808 Cedar Ave 121-16-015 Dorothy L. Fort Jacqueline Bryant Fort
Dorothy L. Fort Jacqueline Bryant Fort Charisee Zelane
9908 Cedar Ave Not found N/A N/A Nearby Property (Corner of E.97th and Cedar)
121-16-014
Cleveland Clinic Josie Bailey
Nearby Property 121-16-011 Cleveland Clinic Sunrise Land Co, Inc.
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Value The next step is to determine the past, present and potential future value of the property. This ensures that the Clinic can make an informed decision before purchased based on the history and projected values.
Address Parcel Number Present Value Last Est. Value 9904 Cedar Ave 121-16-016 $2,300.00 Not known 9808 Cedar Ave 121-16-015 $105,700.00 Not known 9908 Cedar Ave Not known Not known Not known Nearby Property (Corner of E.97th and Cedar)
121-16-014
Not known Not known
Nearby Property 121-16-011 $254,000.00 Not known Use and Compliance with Laws The next step is to determine what the zoning determination is for each property (residential housing or commercial). Additionally, the diligence process should confirm that the property is not currently in violation of any federal, state, county or city laws, including laws governing the use and operation of the building, health and safety codes as well as zoning and environmental laws. Also it is important to know if the Clinic intends to use the property in a manner that differs from the seller's historical use because the Clinic may need to conduct additional diligence to ensure that its intended use is permitted under existing laws.
Address Parcel Number Zoning Designation Land Use Designations 9904 Cedar Ave 121-16-016 Residential 5000 9808 Cedar Ave 121-16-015 Commercial 4970 9908 Cedar Ave Not found Not known Nearby Property (Corner of E.97th and Cedar)
121-16-014
LW 5799
Nearby Property 121-16-011 Commercial 5799 Legal The last tentative preliminary due diligence step is to determine whether the properties have any past or present legal propositions. The due diligence process should determine that the properties are free of any liabilities because the Clinic doesn’t want to assume any liabilities from the purchase. It is important to look for any potential legal propositions potentially like future default on the mortgage.
Address Parcel Number Present Legal Propositions
Past Legal Propositions
Other Considerations
9904 Cedar Ave 121-16-016 None Known None Known Tax Balance=$70.43 9808 Cedar Ave 121-16-015 None Known None Known Tax Balance=$3,300.58 9908 Cedar Ave Not found None Known None Known None Known Nearby Property (Corner of 121-16-014 None Known None Known None Known
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E.97th and Cedar) Nearby Property 121-16-011 None Known None Known None Known
FORM OF WORK PLAN Date: 3/24/14 Project: Due Diligence Project Name: Mutajah Hussein I. Project Goals and Objectives
A. Description of client, constituents and beneficiary being served: Cleveland Clinic Foundation is a public hospital B. Statement of client's problem, need or issue: Client is considering buying commercial property in the Fairfax neighborhood. Client plans to secure a loan for this investment so they need a due diligence report before approaching the seller C. Statement of client's goal: Client wants to become as informed as possible about the properties before approaching the seller D. Objectives to reach client's goal:
• Complete Due Diligence Report
II. Project Work Plan A. Description of the work product: Short Due Diligence Report that summarizes all preliminary findings
B. Resources Needed: • Google • PLC • Westlaw • Cuyahoga County Recorder Site
Search Site e.g. library, Lexis, Westlaw, Practical Law Co.
Citation of Source Evaluation
Google Zillow Basic information about properties
Google Legal Solutions Due diligence forms (mostly demand letters)
Google Due Diligence Checklist
Very helpful because provided outline of areas to explore in due diligence assessment/investigation
Google Due Diligence Process
Lays out important stages of due diligence
1. Preliminary Research 2. Seller’s Document Check 3. Independent Check
Google www.buildingsbyowner.com Legal Due Diligence
Commercial Real Estate Blog Google www.foxbusiness.com Real Estate Due Diligence
Article: provided tips for thorough research
Lexis Due Diligence Dashboard Tool
Due Diligence Corporate Dashboard Tool (not accessible under our plan)
Cuyahoga County Website
Cuyahoga County Fiscal Officer
Provided basic information on 9904 and 9808 but none for 9908
Westlaw Public record search: People Pages
Not accessible under our plan
Google Property Shark Provided parcel numbers for 9808 and 9904 (no information for 9808)
Google City Data Gave owners (information that was missing from other sources)
Cuyahoga County Website
Inquiry Form Form to submit for more information (if decide to move forward)
Google Public Records Online Search
Cost for resources but directed me to some free ones (not helpful for this assignment)
Westlaw State v. Roberts
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Due Diligence Supporting Documents