Due Diligence = The Premarital Credit Check

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Imagine someone giving this advice to a couple about to get married: “Check their credit score and debt history, pull their medical records, and find out exactly why their last marriage ended."" There’s zero romance in that sentence, but it’s also some of the most common advice divorce counselors give. Falling in love doesn’t magically improve the other person’s finances or history.

Buying a building works the same way. Between the moment you fall for a property and the moment you actually sign the contract, there has to be a step in between. That step is called due diligence. It means confirming, item by item, the way a premarital credit check would, whether the building really is what it appears to be, whether any problems exist only on paper, and whether some hidden debt is waiting to ambush you later.

The Basement Is Where the Truth Lives

There’s an old story that makes the rounds among real estate investors. A buyer was touring a row of aging buildings in an old downtown district, all candidates for acquisition. At the last building, he insisted on seeing the basement. The broker showing him around grew visibly flustered and tried to wave him off: “You don’t need to see the basement.” He went down the stairs anyway. What he found was a long, continuous space where the dividing walls between several buildings had been knocked through, and dozens of people bottling homemade wine.[1] The deal died on the spot. From the outside, it was a perfectly respectable row of brownstones. The basement was telling an entirely different story.

The lesson is simple. Once you’ve decided to run a credit check, you can’t stop at whatever the other party is happy to show you. You have to go open the door they’d rather keep shut (the basement, so to speak). Real estate due diligence works the same way. If you only follow the path the seller and broker naturally walk you down, you will never see what they’d rather you didn’t.

The Six Items on the Credit Check

A premarital credit check runs through income, debt, credit score, medical history, family background, and past relationships. Real estate due diligence covers just as many tracks at once. Broadly, it breaks into six branches: physical structure and building systems, environmental issues, legal matters and title, zoning, existing tenancies, and financial records.[2] Check only one branch and skip the rest, and you’ve effectively run half a credit check — confirmed the income, never looked for the hidden debt.

Of the six, environmental issues are the one that should scare you most. Soil contamination, a leaking underground storage tank, asbestos: problems like these, once discovered after closing, can easily run up remediation costs that exceed the purchase price itself. It’s not unlike marrying someone and only afterward discovering they’re on the hook for a massive loan guarantee.”I didn’t know before the wedding” is no excuse once the liability has already transferred to your name.

Finding a Flaw Isn’t the End of the Story

This is where due diligence most closely resembles a premarital credit check. Finding a problem doesn’t automatically mean calling off the wedding — or the purchase. If a credit check turns up an old credit card balance, the smart move is to use that information to negotiate who pays it off and how. Real estate works exactly the same way.

Consider a real estate firm that had agreed to buy a 19-building office complex for $30 million, and what its due diligence process turned up. The investigation surfaced minor environmental issues and some tenant-related defects. Rather than walking away, the firm used those findings as leverage and negotiated the purchase price down by $1.5 million.[3] The discovery of a flaw became the negotiating lever itself. Just as finding a flaw in a credit check doesn’t automatically call off an engagement. It prompts a decision: proceed anyway with eyes open, or renegotiate the terms.

What Happens to People Who Skip the Credit Check

The flip side, people who skipped or rushed through due diligence, tells a far grimmer story. Over the past several years, most of the losses suffered by cross-border real estate investors around the world traced back not to problems with the properties themselves, but to a failure to verify things that should have been verified from the start.

A Brazilian businessman who paid in full for a new-construction apartment in Lagos, in southern Portugal, was drawn in by promises of a Golden Visa and 7 to 10 percent annual returns. The apartment he bought never existed. The seller turned out to be a Ponzi operation dealing in phantom real estate, paying “returns” to existing investors with money from new ones, and it eventually collapsed.[4] A single basic step would have caught the problem: verifying the land registry and permits directly with the relevant government office, the most fundamental credit check there is.

An investor who bought a hotel unit on Dubai’s artificial island development “The Heart of Europe” paid roughly half a million dollars in full but, years later, still hadn’t received a title deed. After a lawsuit, the court ordered a full refund plus damages. It looked like a clean victory — except the property already had thirteen liens filed against it. The developer had neither the ability to transfer ownership nor the assets to pay anyone back.[5] In credit-check terms, this is like verifying someone’s income and never checking whether they already had liens and existing collateral claims against them. The winning judgment was a beautifully worded piece of paper. That paper bought nothing.

On another continent, the credit check got skipped in a slightly different way. A massive new-city project built by China’s largest developer in Johor, Malaysia, drew in the retirement savings of tens of thousands of middle-class Chinese buyers. When China’s government tightened capital-outflow controls in 2017, the money supply from the one buyer pool that had ever wanted these units dried up overnight. Today, one tower stands with lights on in just 25 of its 390 units.[6] The problem here wasn’t a defect in the buildings: it was that nobody seriously asked the due diligence question of whether that buyer pool would still exist down the road. A real credit check asks not just about someone’s finances today, but whether those finances will hold up tomorrow.

Why You Should Never Cut Corners on the Credit Check

Due diligence pulls in lawyers, engineers, appraisers, environmental consultants (a small army of specialists), and the cost is not trivial. That’s exactly why so many first-time investors give in to the temptation to think, “I already love this place, let’s not overdo it.” It’s the same mistake people make when they treat a premarital credit check as an act of distrust and skip it altogether.

But money saved at this stage comes back many times larger later. This is especially true when you’re managing someone else’s money — investor capital or borrowed funds — where thorough due diligence isn’t optional. It’s closer to a legal and moral obligation.[7] Losing a deposit is always better than riding a bad deal all the way down to a far bigger loss. There’s no shame in a deal falling apart. What’s actually dangerous is getting swept up in a deal’s momentum and going through with a marriage that should have been called off.

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Sources [1] Brief 03 (Poorvu, The Real Estate Game, chap. 3) — basement due diligence case in a Boston Italian-American neighborhood [2] Brief 04 (Poorvu, The Real Estate Game, chap. 4) and Brief 10 (Appendix B due diligence checklist) — the six-to-seven-branch structure of due diligence (environmental / legal-title / zoning / structure-systems / tenancy / financial) [3] Brief 04 — JBG’s acquisition of the 19-building Twinbrook Metro portfolio, its due diligence findings, and the resulting price reduction [4] the Portugal IR Group Golden Visa Ponzi scheme (source: IMI Daily, “Portuguese Golden Visa Pyramid Scheme Siphons €37 Million from Investors,” December 8, 2025) [5] the Dubai Heart of Europe investor lawsuit and refund judgment (source: Gulf News, “Dubai court orders Heart of Europe developer to refund investor Dh1.5m over failed title transfer,” June 5, 2026) [6] the collapse of the Chinese buyer base at Forest City, Malaysia, following capital controls (source: Foreign Policy) [7] Brief 04 — the principle that due diligence is both a legal and a moral obligation when handling “other people’s money”