The acquisition of commercial real estate is often fraught with complex issues. Before entering into a purchase, a buyer should do their due diligence. It is imperative that the buyer learn as much as possible 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 investigation:
1. Identify any underground or aboveground storage tanks;
2. Determine if any materials or substances have been released or disposed of on the property;
3. Determine if asbestos has already been located on the property; if so, obtain information regarding the withdrawal/disposal process;
4. Obtain the results of the radon tests and any remediation;
5. Obtain the results of drinking water analyses;
6. Determine if there are lead paint problems;
7. Identify owners of property records and trace previous owners of records to ensure chain of title;
8. Review tenant leases;
9. Obtain from the seller any plans, surveys or diagrams relating to the property;
10. Investigate the property’s compliance with zoning and land use regulations;
11. Carry out a physical inspection of the property; obtain copies of any inspection or engineering reports from Seller;
12. Keep an up-to-date rental register;
13. Obtain copies of property tax bills for the past five years;
14. Determine the need for termite and mold inspections;
15. Obtain any service contract;
16. Assess insurance needs;
17. Obtain all necessary approvals and permits for the intended use of the property;
18. Review Copies of Seller’s Title Insurance Policies
19. Obtain Commitment/Order Judgment and Lien Searches
20. Have legal representation throughout the transaction.