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The acquisition of commercial real estate is often fraught with complex issues. Before closing on any purchase, a buyer should be thorough in his or her due diligence. It is imperative that buyers learn as much as they can about the property, existing conditions and restrictions, title issues, zoning ordinances, tenants, existing leases and environmental hazards. Below is a list of 20 items that should be part of any due diligence check:
1. Identify any underground or above ground storage tanks;
2. Determine whether any materials or substances have been released or disposed of on the property;
3. Determine whether asbestos has ever been located on the property; If so, obtain information regarding the removal/disposal process;
4. Receive test results for radon and any treatment;
5. Receive test results for drinking water;
6. Determine if lead paint issues exist;
7. Identify the property’s record owners and trace previous record owners to insure chain of title;
8. Review tenant leases;
9. Receive from the Seller any plans, surveys or drawings in relation to the Property;
10. Check the property’s compliance with zoning and land use regulations;
11. Carrying out physical inspection of the property; obtaining copies of any inspection or engineers’ reports from Seller;
12. Receive up to date rent rolls;
13. Receive copies of property tax bills for the last five years;
14. Determine the need for termite and mildew inspection;
15. Receive a service contract;
16. Evaluate insurance needs;
17. Obtain all necessary approvals and permits for the intended use of the property;
18. Review copies of title insurance policies from the seller
19. Receive Title Commitment/Order Judgment and Lien Search
20. Have legal representation throughout the transaction.
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