What should I verify before buying commercial property?

Make a deadline register first

Have counsel identify the inspection, financing, title-objection, deposit, and closing deadlines in the executed agreement. Record what notice must be delivered, to whom, by which method, and by what time. Then assign each investigation to a person and a delivery date.

Work backward from the date you must act. If the environmental consultant, lender, or engineer cannot deliver in time, address that immediately. Ordering a report is not the same as receiving and reviewing it. Keep extensions and other changes documented through the parties and their counsel.

Reconstruct the property income

Request executed leases and amendments, a current rent roll, collection records, operating statements, and supporting expenses. Create a tenant-by-tenant schedule showing space, rent, reimbursements, expiration, renewal options, deposits, and concessions.

Compare what the lease requires with what was actually collected. Flag delinquency, free rent, side agreements, landlord work, and disputed reimbursements. Ask the lender how it treats vacant space and uncollected income. Keep current performance separate from a proposed stabilized case; unsigned future rent is not an executed obligation.

Establish the physical scope

Engage qualified inspectors for the building and major systems. Ask them to identify immediate work, deferred maintenance, remaining useful-life issues, safety concerns, and the scope of further investigation. Translate findings into contractor quotes and a schedule.

Separate a repair estimate from a replacement estimate. Record what was inspected, what was inaccessible, and what was outside the consultant’s scope. If an issue is material to the acquisition, obtain the additional investigation rather than accepting a brief visual observation as a complete answer.

Address environmental conditions before closing

EPA’s All Appropriate Inquiries framework evaluates environmental conditions and potential contamination liability. It recognizes specified ASTM Phase I standards and sets timing and professional requirements. Ask an environmental professional and counsel which investigation and protections are applicable. See source 1.

Provide known prior uses, existing reports, and any specialized knowledge to the consultant. Ask whether further testing is needed, what the existing report allows you to rely on, and whether updates are required before acquisition. A clean-looking building does not replace this work.

Confirm title, access and the intended use

• Have title counsel review ownership, liens, easements, restrictions and exceptions.
• Have a surveyor reconcile boundaries, improvements and access with the title materials.
• Ask the applicable planning authority to confirm the intended use and any necessary approvals.
• Identify utility service, capacity, connection obligations and required improvements.
• Ask qualified professionals to address flood, drainage, wetlands and other site constraints.

Future land use, zoning, a conceptual plan, and a building’s prior occupancy answer different questions. For a specific parcel, request the actual approvals and conditions that authorize your proposed activity. Confirm the responsible jurisdiction before relying on a county or municipal record.

Coordinate financing with the actual findings

Give the lender current reports and any revised budget. Ask which appraisal, environmental, insurance, occupancy, or title conditions remain open. Request a closing-condition list and track responsibility for each item.

The OCC’s CRE lending handbook distinguishes property income review from borrower and guarantor support. For an owner-user, the operating business’s ability to service debt is central. For investment property, ask how the lender adjusts income and expenses and what definitions govern covenants. See source 2.

Turn findings into a decision

Create a findings register with four fields: the issue, its documentary support, the proposed resolution, and the decision deadline. Avoid mixing items that merely need clarification with items that change price, financing, use, or required capital.

Ask counsel how a material finding affects your options under the agreement. Request written resolutions where appropriate. Before the final decision, confirm that the operating budget includes the work you have discovered and that your remaining cash is sufficient for the approved plan.

Your closing review

• All material reports received and reviewed.
• Remaining exceptions and limitations identified.
• Repairs and capital work priced or consciously unresolved.
• Leases, deposits, prorations and required tenant confirmations reconciled.
• Financing conditions and insurance addressed.
• Use, access, title and site constraints reviewed by the appropriate professionals.
• Contractual notices and closing deliverables confirmed with counsel.

This checklist is a starting scope, not a certification that a property is safe to acquire. A property-specific team should add work for the asset type, history, intended use, and contract.

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