Commercial Real Estate Due Diligence: What to Verify

Map the contract deadlines and responsibility for each review

Identify inspection periods, document-delivery dates, financing milestones, notice requirements, and closing conditions with the transaction team. Assign each workstream to a responsible person and record unresolved items.

Request the relevant leases and amendments, rent roll, operating statements, service contracts, insurance information, tax records, plans, permits, warranties, and prior reports. Track which documents are missing and how that limits the analysis.

Verify the income and lease obligations

Reconcile the rent roll with executed leases, collections, concessions, deposits, and expense recoveries. Review expirations, renewal and termination rights, guarantees, and pending disputes. Counsel can help interpret terms that affect the purchase or operating plan.

Where appropriate, tenant estoppels help confirm specified lease facts directly with tenants. They do not replace reading the leases or investigating contradictions. Review any required subordination, non-disturbance, or lender agreements with counsel.

Investigate the physical, environmental, and legal property

Arrange property-condition work and specialist inspections matched to the asset: structure, roof, building systems, accessibility, safety, and infrastructure as relevant. Convert findings into a scope, schedule, and capital budget.

A Phase I environmental site assessment is a distinct investigation. EPA explains how recognized assessment standards relate to All Appropriate Inquiries. An environmental professional should assess whether additional investigation is needed; a visual walkthrough is not a substitute.

Title and survey review should examine ownership, liens, easements, access, encroachments, and other relevant exceptions. Verify zoning, permitted use, approvals, and restrictions for the intended operation rather than assuming the current use proves compliance.

• Financial records establish operating evidence.
• Lease review establishes contractual income and obligations.
• Physical reports establish condition within their stated scope.
• Environmental review addresses a different set of property risks.
• Title, survey, and zoning work address rights and permitted use.

Resolve findings before treating the deal as ready

Maintain a closing issue log with evidence, cost, responsibility, deadline, and resolution. Update the purchase model and financing information when findings change income, required work, or risk.

Confirm insurance, funds, transferred contracts, tenant deposits, access, keys, utilities, and management handoff. Preserve final documents for the operating team. The diligence process should improve the decision, including when the evidence supports renegotiating or declining the purchase.

Common questions