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Presented by:Steve Cupitt – Senior Environmental

ScientistSaron Kimber – Environmental Engineer

Due Diligence Investigations

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Due Diligence – putting it into perspective

People pay $20,000 for a 2nd hand car and willingly spend 5% of the cars value getting the relevant checks.

People pay $500,000 for a home and without a thought, spend 2% of the homes value conducting a DDI, but,

They pay $5,000,000 for the average rural property but are not required to spend 0.1% of the properties value doing a basic check that could save them a small fortune: Strange when you consider they will be relying on that property for an income from the day of purchase and likely for many years into the future.

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Ten Basic Questions Most Landholders Cannot Answer

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Question 1

Have I done a check of mapping and all the on-line data bases before disturbing remnant or regrowth vegetation?Do I really know what defines regrowth and which legislation should I take the most notice of? The results might surprise you.

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Question 2

Do I need to do a WON’s survey (what is WON’s?) to make sure LG don’t enforce a bio-security compliance order on me. Will enacting that bio-security order from the LG put me in breach of State and Commonwealth legislation?In NSW, that is a possibility. How then do I stay inside the law?

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Question 3

I have a PMAV (QLD only) so can clear any regrowth I

want to? Wrong. With some types of vegetation (i.e. TEC, MNES – what do those letters mean) Commonwealth Legislation and even Local Government laws can override a PMAV.

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Question 4

Can I continue to cultivate and crop a paddock that’s

obviously an old cultivation paddock? It only has a couple of trees dotted here and there and it was previously under cultivation, so there won’t be a problem, right? Wrong! In QLD you will likely be OK, but the EPBC Act might come into play. In NSW, you may be breaching the Threatened Species Act 1995 and the EPBC Act.

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Question 5

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Have I done a check for contaminated land?Did the previous land-owner cover over an old dump site?Did the property have an old dip site on it many years ago?Will this have implications for cropping and/or grazing?Will this have implications on my planned organic certification?

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Question 6

The previous landholder gave me paperwork that says I can pump XYZ mega litres of water from the bore or river. The paperwork is signed by the Government and says what water I can use so it must be correct! Not necessarily.

It pays to check because the implications, if you’re wrong, can be quite serious.

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Question 7

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Does the property I’m purchasing have an MDL, MT, a PL or a NTL (what is a MDL, PL, MT or NTL?) showing on the property search form. Does this mean someone else has an interest in the property?

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Question 8

The paperwork says my property is listed as a GHPL, GHFL, and SL, Freehold or the rarely heard of “Fee Simple”. What do they mean, do they have any restrictions on development and on what I can do on the property. Is the property boundary actually in the right place? This can be quite relevant if you property is near an escarpment, jump-up or some hard country. What does this mean for me?

The fence is on the other side of the creek. Does this mean all this side of the creek is mine? No, it doesn't.

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Question 9

Is the country I’m looking at buying or thinking about cropping actually suited to the crops I’m familiar with?

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Question 10

Do those areas of dead grass, wet areas or fleshy plants have any significance? Should I be concerned? Yes, you should. Different species composition, decolourisation of the grasses, the presence of fleshy plants (chenopods) indicate a possible discharge area (salinity) or a watertable rising to the surface. What will that mean for future cropping or grazing?

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Every one of those 10 questions have answers that will effect that properties ability to be financially viable

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Lawyers and Real Estate Agents have a legal and moral obligation to provide the basic information, however, the onus is on the landholder to conduct the full suite of investigations themselves.

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Who Does DDI’s?

A number of consultants, banks, real estates and agricultural groups conduct DDI’s to some extent, but it would appear none have the same capacity and in-depth knowledge that RPS has.

RPS have planners, ecologists, surveyors, GIS, hydrologists, soil scientists, engineers, people with a strong rural background and access to specialised rural industry personnel who we formed a strong relationship with over many years. We have the capacity to cover off on every aspect of the DDI.

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What's involved in a DDI?

To date, there have been over 40 issues identified that landholders may need to consider with more being identified as we progress.

Some issues can be resolved by a desktop search or an information request, but many require specialist knowledge (i.e. recognising salinity, contaminated site from an old property dump) and a site visit.

The requirements for each property, location or farming enterprise will be different based on location, farming enterprise and each landholders plan for the property.

Each DDI will be tailored to a properties / landholders requirements with specialist advice on what needs to be covered during a preliminary meeting.

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Examples of issues covered in a DDI

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* EPBC Search * Essential Habitat * Referable wetlands * Salinity and erosion hazard mapping * LG Planning * Environmental Mgt Register * CITEC searches, Register of the National Estate * Australian Heritage Database * Current/historic water licences * Land-use planning * State Koala mapping * LG building searches * Contaminated land * Local fire plans * WON’s search, Referable wetlands * soil mapping and analysis * Water quality investigations * Weir wall heights * Cultural Heritage provisions * Machinery conditions report * property infrastructure condition report

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If DDI’s are so important, why aren't they a mandatory requirement?

The NSW State Government indicate it will have legislated in the near future, that EVERY property must have a DDI conducted pre-purchase or pre-development.

Many of the major lending institutions are considering, or have already implemented, a requirement that a DDI be conducted before they lend the money.

Some landholders have already learnt the hard way that the lack of a DDI can be very expensive and should be mandatory.

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How will the DDI’s be structured?

Each properties requirements will be identified by an initial meeting between RPS and the client.

The DDI will be tailored to each properties / landholders specific needs.

Provision of a fixed price quote and detailed proposal, but dependent on the complexities of the issues encountered (may be hourly rate)

Provision of a comprehensive report that is colour coded green (constraints limited or unlikely), orange (minor constraints that may require caution or further consideration) and red (Stop – if you proceed, there may be serious implications) and general information containing statements of fact (i.e. details of a licence or permit). 20

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Who are the clients and how will they know about the service we provide?

Rural landholders / investors Foreign investors Land developers Anybody investing in land, infrastructure, industry

To this end, contact has been made with FIRB, KPMG (Chinese Business Practice), Australian / Chinese Business Council, Banks, Juwai and Wadley Business Consulting Shanghai/Co Ltd, Suncorp Agribusiness, Westpac, ANZ, QFF, Agforce, Grain Growers etc.

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Summary

There is a large market for rural risk identification and mitigation;

All rural investors should conduct a DDI; RPS can provide the full suite of services; RPS has the capacity to be at the front of an emerging

market when the States makes a DDI report compulsory;

RPS has the broad range of specialist skills and the industry contacts to deliver the suite of Due Diligence Investigative services required;

To the prospective clients, its all about risk control.

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The Final Word

From a Chinese property investor:

“ Nothing in life is to be feared....... It is only to be understood”

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Do you know where the risks are on your property and what the

implications are if those risks are not identified?

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