Commercial Property Due Diligence Checklist

The contract decides how much diligence you can actually do. Several terms deserve attention before you sign: the length of the period, your access to the building, what the seller must deliver, and how you can terminate and recover your deposit.

Thompson Coburn, in a checklist for buyers, says it typically urges clients to incorporate the checklist into the sale contract, and to require that the due diligence period not start until the seller produces the last deliverable. That protects you from losing weeks to a slow seller. Ask your attorney whether your deal can support the same request.

1. Name one person to run the process and keep the list of open items.
2. Book your attorney, title company, surveyor, environmental professional and building inspector before the period begins.
3. Ask your lender which reports it requires and who must order them, so you do not pay for the same report twice.
4. Put the termination deadline and its notice requirements on the calendar, with time to decide.
5. Hold a go or no-go meeting ahead of the deadline, not on it.

Most of this list follows the Thompson Coburn checklist. Ask for what exists and get a written statement about what does not.

• ✓Most recent title policy or title commitment, with related documents?
• ✓Most recent ALTA survey, plans, engineering drawings and as-built drawings?
• ✓Legal description of the property?
• ✓Zoning compliance certificate, variances and any pending applications?
• ✓Recorded covenants, conditions, restrictions and easements?
• ✓Earlier environmental, engineering, soil, foundation and appraisal reports?
• ✓Last three years of real estate tax bills, special assessments and tax protest results?
• ✓Prior two years of utility bills?
• ✓All service contracts, including a written summary of any oral ones?
• ✓Income and expense records for the last three years?
• ✓Permits, certificates of occupancy, warranties, government notices and code violations?
• ✓Current insurance policies and any pending claims?
• ✓A schedule of pending litigation affecting the property or the sale?

You need to know what you are buying, what burdens it and whether you may use it as you plan. Your attorney and title company lead this work.

• ✓Does the seller's title match the contract, and does the legal description match the survey?
• ✓Which exceptions in the title commitment restrict our use, access, parking or expansion?
• ✓Are there liens, unpaid special assessments or judgments that must be cleared at closing?
• ✓Does the survey show encroachments, setback problems or easements through places we plan to build?
• ✓Does zoning permit our specific use, including outdoor storage, clinical use, or light manufacturing if relevant?
• ✓Does our use trigger different parking, loading or occupancy requirements?
• ✓Would our planned changes require a permit, variance or a change in occupancy classification?
• ✓Is there an open permit or violation we would inherit?

A zoning letter that says a property is zoned correctly for its current use does not settle whether your use is allowed. Ask the question about your use.

An outside consultant should walk the building, and your own operations lead should walk it too. They are looking for different problems.

• ✓What are the age, condition and remaining life of the roof, heating and cooling, electrical, plumbing and fire systems?
• ✓Are there signs of structural problems, water intrusion or poor drainage?
• ✓What would need replacing in the next several years, and at what cost?
• ✓Are the power, floor load, clear height, loading docks and data connections adequate for our work?
• ✓Do equipment warranties transfer to a buyer?
• ✓If we serve the public, what barriers to accessibility exist?
• ✓Have we priced our own build-out based on the actual building?

On accessibility, the Department of Justice's ADA primer says businesses open to the public must remove barriers in existing facilities when it is readily achievable, and that alterations and new construction follow specific standards. Have your architect or attorney advise you, particularly if you plan to renovate.

EPA explains that under the federal Superfund law, liability for contamination may be assigned based solely on property ownership. Liability protections require specific steps, including all appropriate inquiries before you acquire the property, so this item cannot wait until after closing.

• ✓Have we commissioned a Phase I environmental site assessment that will be current at closing?
• ✓Is the report addressed to us, and can our lender rely on it?
• ✓What did the current and past uses of this site and nearby sites involve?
• ✓Are any further investigations, such as sampling, recommended?
• ✓Have we checked for concerns outside a standard Phase I, such as asbestos, lead paint, mold or radon, if they matter for this building?
• ✓What does the FEMA flood map show for this property, and what insurance would be required?

If you plan to use an SBA loan, the lender has its own environmental steps. SOP 50 10 8.1 (effective October 1, 2026, and subject to change) requires an environmental investigation on commercial property taken as collateral, with the required depth depending on past uses and loan size.

An owner-user buying a partly leased building is becoming a landlord, and may also need a tenant to leave. Do not assume a sale ends an existing lease. Have your attorney read every one.

• ✓Do we have every lease, amendment and guaranty, and confirmation that there are no oral agreements?
• ✓Does a certified rent roll show rents, deposits, delinquencies and lease dates?
• ✓Do tenants have renewal, expansion, purchase or termination rights that affect our move-in date?
• ✓Will the seller deliver signed tenant estoppels, and will the lender require subordination agreements?
• ✓Do we have enough space under the SBA occupancy rule if we are using an SBA loan?
• ✓Which service contracts will we keep, and which must the seller end?
• ✓Does our real operating budget match the seller's expense history once adjusted for our use?
• ✓Has our lender confirmed that the appraisal, reports and survey meet its conditions?

Findings are useful only if you act on them before the deadline. Generally, a buyer has four responses: accept the issue, ask the seller to fix it, ask for a price change or credit, or terminate as the contract allows. Rank each finding by cost and by whether it interferes with your operations, then take the list to your attorney.

Tenant Advisory Group represents buyers, and we keep the deal's dates, seller deliverables and consultants' findings connected to the negotiation. Legal, environmental and engineering conclusions belong to your attorney and consultants, so confirm every item with them.