LITHUANIA Law and Practice Contributed by: Evaldas Klimas and Vygintas Kuprys, WALLESS
Most documents, such as sale and purchase agreements and powers of attorney, can be approved via virtual meetings. All real estate in Lithuania is registered in the Real Estate Register, which provides comprehensive information on a real estate owner (including the transfers of title), leases, mortgages, seizures and other encumbrances registered in respect of real estate, and also regarding ongoing law - suits, decisions of authorities affecting the real estate (eg, decisions regarding expropriation procedures). An investor can therefore receive up-to-date data on any real estate at any time. By virtue of the law, data recorded in the public register is deemed accurate and true (prima facie evidence) unless rebutted. As a result, given that the registration system in Lithuania is compre - hensive and reliable, title insurance is not com - mon. 2.4 Real Estate Due Diligence Buyers usually carry out real estate due diligence before entering into a transaction. The buyer typically carries out legal, commercial (if the real estate is acquired through an investment vehi - cle rather than directly), financial, technical and environmental due diligence. Any type of due diligence normally includes three parts. • Preparation: this includes the identification of objects, goals and timeframes, as well as entering into confidential and non-disclosure agreements. • Investigation: this includes the collection of facts and documents from both the seller and the buyer. The information is mainly gathered according to the checklist provided by the buyer team. All the information requested by the buyer and its consultants is typically uploaded to virtual data rooms. In today’s
world, it is quite rare to have a physical data room. This stage also includes the analysis and evaluation of the information and material provided and questions or interviews with the management and relevant personnel of the seller. • Results: this typically includes the preparation and presentation of the due diligence report, which details the main risks involved and makes suggestions for transaction documen - tation. Red flag due diligence is usually performed, out - lining only the major issues pertaining to the real estate under the agreed materiality threshold. 2.5 Typical Representations and Warranties The seller has a statutory obligation to disclose all third parties’ rights, mortgages, seizures, ongoing litigation and other encumbrances with respect to the real estate to the buyer. In the case of a breach by the seller or if the seller is not able to prove that the buyer was aware of the respec - tive encumbrances, the buyer is entitled to claim a reduction of the purchase price or termination of the sale and purchase agreement. Fines are the most common security for the enforcement of those remedies. Representation and warranty insurance is not used in Lithuania. There is no typical cap on the seller’s liability for a breach of its representations and warranties. In some cases, a cap is agreed but it depends on the specifics of the transaction and/or the real estate. Usually, only the representations and warranties related to the suitability of construction works expire after the end of the warranty terms stipu - lated in the legal acts, which is five, ten or 20 years. Other representations and warranties are
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