Commercial Real Estate Due Diligence Checklist

Use the Commercial Real Estate Due Diligence Checklist to ensure thorough commercial property assessments through audits of receivables, tenant files, etc.

Commercial Real Estate Due Diligence Checklist



Tenant Information

1. Does the rent roll show the tenant's name, suite number, and size of premises for each tenant?


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2. Is the rent provided, including scheduled rental increases and percentage rent?


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3. Are the term commencement and expiration dates provided, along with any extending options?


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4. Are options and rights of refusal to expand or contract the premises or to terminate the lease provided?


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5. Is the common area expense pro rata share provided, along with base year and base year expenses if applicable, and any caps?


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6. Is the security deposit information provided?


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7. Are guarantors, if any, identified?


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8. Are concessions made to tenants provided, including free or reduced rent, above-standard tenant improvements, cash payments, moving allowances, or takeover of previous lease obligations?


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9. Is the nature of the tenant’s business and use, including exclusive use rights if any, provided?


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10. Is a schedule of any tenant improvement work by the seller obligated to complete but has not yet been completed and capital improvement work either scheduled or in process on the date of this purchase agreement provided?


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11. Are current and historic vacancy rates provided?


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12. Are copies of all leases (including all exhibits and attachments) and amendments, including guarantees and subleases provided?


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13. Is a copy of or access to review the tenants’ files maintained by the seller provided?


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14. Are most recent financial statements and credit information and reports, if any, for all tenants and guarantors provided?


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15. Are current and historic payment reports for each tenant provided?


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16. Are any executed letters of intent with prospective tenants provided?


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17. Is the most recent leasing status report from the leasing broker provided?


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18. Is a standard form lease provided?


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Operating Information

1. Are financial statements of the property provided for the past three years and year-to-date for the current calendar year?


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2. Are current operating and capital expense budgets of the property provided, including a comparison of actual to budgeted results and an explanation of significant variances?


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3. Is a listing of capital expenditures for the property for the prior years provided?


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4. Are copies of all service, maintenance, leasing, management, or other contracts, and all other agreements, warranties, and guarantees relating to the operation, use, management, or maintenance of the property provided?


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5. Are copies of real estate tax bills (including special assessments) for the prior three years provided, including evidence of payment of each?


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6. Are utility bills for the last two years provided?


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7. Is an aged receivables report through the date for the prior twenty-four months provided?


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8. Are copies of all owner’s insurance policies now in effect concerning the property provided, including owner disclosure affidavits, insurance inspector’s risk assessment reports, copies of any claims under such policies, and evidence in Seller’s possession that tenants are maintaining the insurance coverages required under their leases?


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9. Is a list of employees, if applicable, including name, position, wage, and benefits provided?


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Building Information (Plans And Reports)

1. Are mechanical reports, including HVAC, provided?


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2. Are roof reports provided?


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3. Are environmental reports, including soil tests, radon, mold, lead paint, and asbestos reports, provided?


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4. Are geotechnical soil reports provided?


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5. Is a seismic risk assessment (probable maximum loss) report provided?


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6. Are plans and specifications showing the “as-built” condition of the property provided?


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7. Are reports showing compliance with Americans with Disabilities Act (ADA) requirements provided?


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8. Is an architect’s certificate or studies certifying the square footage of the building provided?


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Miscellaneous

1. Are all licenses, permits, and approvals for the property provided, including certificates of occupancy for the building and each tenant?


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2. Is the most recent boundary and/or title survey provided?


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3. Is the Seller’s policy of title insurance for the property provided?


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4. Are copies of existing loan documents provided if the loan(s) are being assumed?


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5. Are copies of any notices of violations of or verifications of compliance with any federal, state, municipal, or other health, fire, building, zoning, safety, environmental protection, or other applicable codes, laws, rules, regulations, or ordinances relating or applying to the property provided?


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6. Is a list of all pending and historic litigation against the property, against Seller, or any general partner of the Seller that relates to the property provided?


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7. For larger properties, are trademarks, brochures, and websites provided if such intellectual property is transferred?


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8. Is a list of all furniture, fixtures, equipment, and supplies attached to, located in, or used in connection with the operation of the property which will be conveyed to the buyer provided?


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Checklist by GoAudits.com – Please note that this checklist is intended as an example. We do not guarantee compliance with the laws applicable to your territory or industry. You should seek professional advice to determine how this checklist should be adapted to your workplace or jurisdiction.

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