Commercial property due diligence checklist: what to verify before you buy

A commercial property due diligence checklist is the list of things a buyer verifies before committing to an office, retail unit, industrial building or mixed-use asset. It differs from buying a company: you are acquiring a physical asset and its income, so the questions centre on title, the leases that produce the rent, the building's condition, environmental liabilities and what the planning position allows. Missing one of those areas rarely shows up at completion — it shows up the first time a tenant leaves or a roof fails.

What a commercial property due diligence checklist covers

• Title and ownership: registered title, boundaries, rights of way, restrictive covenants and charges.
• Leases and income: every lease, rent schedule, break dates, service charge arrangements and arrears.
• Physical condition: structural survey, building services, roof, and a view on capital expenditure ahead.
• Environmental: contamination history, asbestos, flood risk and any regulatory notices.
• Planning and use: permitted use, planning history, building regulations sign-offs and enforcement issues.
• Compliance: fire risk assessment, lifts, electrical and gas certificates, accessibility.
• Financial and tax: purchase taxes, capital allowances available, insurance history.

Leases are where the value sits

For an income-producing property, the leases are the business you are buying. Read every lease, not a summary: rent review mechanisms, break options, repairing obligations, assignment rights and any side letters. Ask tenants to confirm key terms directly through estoppel certificates, so that what the seller says matches what tenants believe they agreed. A rent roll that does not reconcile to the leases is a price conversation, not an administrative detail.

Check break dates against your financing assumptions. A tenant with a break option in eighteen months is not the same income as a tenant locked in for ten years, even if the current rent is identical.

Run the checklist with owners and dates

1. Split the checklist by adviser: legal on title and leases, surveyor on condition, environmental consultant on contamination, tax adviser on allowances.
2. Send one consolidated request list to the seller, numbered, so responses map to items.
3. Record each item's status — requested, received, reviewed, issue raised, closed — with the date and owner.
4. Log every issue found with its likely cost or risk and the proposed treatment: price reduction, seller works, indemnity or walk away.
5. Review open items weekly with all advisers against the exchange date.
6. Before exchange, confirm every item is closed or has an agreed treatment in the contract.

Ettex Records suits this well: one row per checklist item with owner, status, dates and the documents attached, plus a separate issues list that feeds the negotiation. It keeps legal, survey and environmental findings in one view instead of three advisers' email threads. The wider transaction principles are the same as any due diligence checklist; the asset-specific items above are what change.

Issues that most often change the deal

• Tenant break options or leases expiring shortly after completion.
• Service charge disputes or significant arrears.
• Roof, façade or building services near the end of their life.
• Asbestos or contamination requiring management or remediation.
• Use that does not match the planning permission.
• Dilapidations claims pending against outgoing tenants.