Commercial real estate acquisition is often fraught with complex issues. Before closing on any purchase, a buyer should be thorough in their due diligence. It is imperative that the buyer learn as much as he 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 investigation:
1. Identify any above ground or underground storage tanks;
2. Determine whether materials or substances have been released or disposed of on the property;
3. Determine if asbestos has ever been found on the property; if so, get information about the removal/disposal process;
4. Obtain radon test results and any remediation;
5. Obtain the results of drinking water tests;
6. Determine if there are lead paint problems;
7. Identify record holders of the property and trace previous record holders to ensure chain of title;
8. Review tenant leases;
9. Obtain from the seller any plans, surveys or diagrams of the property;
10. Investigate the property’s compliance with zoning and land use regulations;
11. Carry out physical inspection of the property; Obtain copies of any inspection or engineer reports from the seller;
12. Catch up on the rental list;
13. Obtain copies of property tax bills for the last 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. Get Title Compromise/Judgment Order and Link Searches
20. Have legal representation throughout the transaction.