What Will a Buyer Inspect? Environmental, Title, Survey and Condition

A signed letter of intent is not a closed sale. The purchase agreement gives the buyer a period to investigate the property, and in most agreements the buyer may withdraw or ask to renegotiate during that time. Almost every price reduction in a sale-leaseback traces back to something found in diligence that the seller had not disclosed, or did not know.

Owner-occupiers are at a particular disadvantage here. Many bought their buildings long ago, financed them with a local bank or not at all, and have never had the property examined the way an institutional buyer or its lender will examine it. Knowing what is coming is the first step to staying ahead of it.

Nearly every commercial buyer and lender will require a Phase I environmental site assessment. The US Environmental Protection Agency describes the underlying process, called all appropriate inquiries, as evaluating a property's environmental conditions and assessing potential liability for contamination. Buyers care because conducting that inquiry before acquisition supports their claim to certain liability protections under federal law, such as bona fide prospective purchaser status. EPA states that ASTM International's E1527-21 standard can be used to satisfy the requirement.

The ASTM standard describes itself as defining good commercial and customary practice for an environmental site assessment of commercial real estate. In practice, a consultant reviews historical and regulatory records, walks the site and interviews people who know the property. The goal is to identify what the standard calls recognized environmental conditions: the presence or likely presence of hazardous substances or petroleum products at the property due to a release, or conditions that pose a material threat of a future release. Minor, de minimis conditions do not count.

A Phase I is an investigation of records and observations. If it identifies a concern, the buyer will usually want follow-up work, commonly called a Phase II, that involves testing. That is where time and uncertainty enter the deal.

• Typical triggers at owner-occupied sites: current or former underground tanks, floor drains and sumps, degreasers and solvents, plating or painting operations, stained soil or pavement, old fill, and past uses of the site or neighboring properties.
• Timing matters: EPA says the inquiry must be conducted or updated within one year before acquisition, and certain parts, including interviews, records review and the site inspection, within 180 days. A report you commissioned years ago will not satisfy a buyer, though it remains useful background.
• The interview includes you. Expect a questionnaire about past uses, spills, tanks and waste handling. Answer accurately and consistently with your records.

The buyer will order a title commitment from a title insurance company. It lists who holds title, the legal description, and every recorded item affecting the property: mortgages, liens, easements, covenants, restrictions and agreements. The buyer's attorney reviews it and sends a list of objections that the seller is asked to clear.

Common findings on long-held properties include a mortgage that was paid off but never formally released, title held in the name of a dissolved entity, a deceased owner or an old trust, mechanics liens from past construction, unpaid tax or utility items, old easements nobody remembers, and use restrictions or rights of first refusal in favor of a prior owner or neighbor. Most are curable. Few are curable quickly, which is why finding them early matters.

Commercial buyers generally require an ALTA/NSPS Land Title Survey. According to the American Land Title Association, these standards establish the minimum requirements for surveys used in commercial real estate transactions and help identify boundary issues, easements and encroachments. The current edition is the 2026 Minimum Standard Detail Requirements, which took effect February 23, 2026, and includes a list of optional items, known as Table A, that the buyer or its lender selects.

The survey is read side by side with the title commitment. It shows where the boundaries, buildings, parking, access points and easements actually are. Problems it tends to reveal include a building, fence or parking area that crosses a property line, a neighbor's improvements on your land, improvements built over a utility easement, access that depends on someone else's parcel, and a legal description that does not match the land the company actually uses. An existing survey, even an old one, gives the surveyor a head start and gives you a preview.

The buyer will hire an engineer or consultant to assess the building. The usual framework is ASTM E2018. Intertek, a testing and inspection firm, summarizes the procedure as a walk-through survey of readily accessible, easily visible components and systems of the property, resulting in a property condition report with a summary of observations and recommendations. It is used for due diligence in commercial transactions and as a guide for capital planning.

Expect attention to the roof, structure, exterior walls, pavement, HVAC, electrical service, plumbing, fire protection and loading areas. In a sale-leaseback the report has two uses. The buyer uses it to judge the building's long-term value. Both sides use it to negotiate who is responsible for repairs and replacements under the lease. If the report shows a roof near the end of its life, the buyer may ask for a price credit, a repair before closing, or lease language making the tenant responsible for replacing it. Maintenance records and warranties are your strongest response.

Buyers also confirm that the current use is permitted under zoning, that certificates of occupancy and permits are in order, and that there are no open code violations. Additions or build-outs completed without permits are a frequent finding at owner-occupied buildings.

If anyone else occupies part of the property, such as a subtenant, an affiliate, a rooftop antenna operator or a billboard company, the buyer will want copies of those agreements and a signed estoppel certificate from each party confirming the terms and that no defaults exist. If the operating company currently leases from a related real estate entity, that arrangement will be replaced by the new lease at closing, and the buyer will want to see that it is properly terminated.

1. Gather what you have: prior environmental reports, the owner's title policy, old surveys, roof and equipment warranties, maintenance logs, permits and tax bills.
2. Have your attorney order a title search or commitment and review it for items to clear.
3. Talk to environmental counsel before commissioning a new environmental report, so you understand how to handle whatever it finds.
4. Walk the building with a contractor or engineer and list deferred maintenance.
5. Fix what is inexpensive to fix: release old liens, close open permits, repair obvious defects.
6. For what cannot be fixed quickly, prepare a plan and disclose it with the offering.
7. Organize everything in a data room so buyers can price with full information.

• ✓Do we know every past use of this site, including before we owned it?
• ✓Is title held by the correct, active entity, and are old mortgages released?
• ✓Do our buildings and parking sit entirely within our boundaries?
• ✓How old is the roof, and can we document its maintenance?
• ✓Were all additions and build-outs permitted and closed out?
• ✓Does anyone else have a right to occupy or buy any part of the property?

An issue disclosed at the start is priced once, by several competing buyers. The same issue discovered by a single buyer late in diligence becomes a reason to reduce the price when you have the least room to say no. We help owners assemble this picture before going to market and manage buyer diligence once it starts, working alongside your attorney and environmental consultant.