Due diligence checklist: Essential steps before buying a commercial property

Buying commercial property is an important financial decision that shouldn’t be taken lightly. When you find what you believe to be the right property to suit your needs and purpose, following due diligence is essential to ensuring that there isn’t anything unexpected that could cause problems further down the line. Whether you’re a first-time buyer or a seasoned investor, you should always make sure the correct due diligence is carried out before going through with the purchase.

Even though the relevant professionals will complete the actual due diligence, it’s vital that you understand what aspects need to be checked. This is what we will be going through in this checklist guide.


Using the right experts

The first part of the due diligence checklist is engaging the services of the right experts to carry out the various aspects of the property evaluation. These might include:

  • Estate agent – they will help you find the right property, understand its current market value, and negotiate a deal.
  • Property surveyor – to carry out a detailed physical inspection of the property.
  • Commercial property solicitor – to review legal documents, contracts, and complete the relevant searches.


Review documents

Your conveyancer or solicitor is there to make sure that the legal status of the commercial property you want to purchase is in order. Therefore, a key part of the due diligence is for them to review all legal documents that are relevant to the property including title insurance, the deed, and any existing contracts or leases. This is important as it will uncover any potential hidden legal issues that may impact your purchase and use of the property.

Environmental assessment and property survey

As well as checking the legalities of the property, another aspect of due diligence your solicitor will need to complete is an environmental assessment. This is especially important for older buildings or properties located in industrial areas.

Searches in the assessment will check for any potential hazards relating to the property such as asbestos, hazardous materials, or soil contamination. Your solicitor will also be able to advise you on any drainage issues and planning permission. A survey is designed to highlight any property line disputes or encroachments. It ensures that the stated boundaries of the property match with the legal description in the deeds.

Inspecting the property

Another key part of commercial property due diligence is having a physical inspection of the property by a qualified property surveyor. It’s important not to skip this step and think that everything is fine because you’ve viewed the property. The job of a surveyor is to complete a more detailed assessment of the condition of the building, including its structure, roofing, electrical systems, plumbing, and more. The outcome of the inspection might uncover maintenance or repair needs that you could present to the seller for a price negotiation, or simply accommodate into your renovation costs for after you have purchased the building.

Reviewing the financials

An in-depth evaluation of the property’s finances is important to help you gain an insight into the possible return on investment. This will include reviewing the property’s tax records, income and expense statements, and any outstanding liens or assessments. As a result, you can understand where the profitability is in the property and potentially identify opportunities to increase return on investment.

Title search

The title search is an essential part of the due diligence as it not only verifies the owner of the property, but also any encumbrances, legal disputes, or anything else that could be problematic for your purchase. A title search is there to make sure that you will get clear unquestionable title to the property when the sale has been completed.

Checking the lease

If the property has tenants, it’s important that their leases are checked in detail to understand the terms of their agreement, the rent they are paying, and any other obligations from either side. This will help to uncover any problems with the tenants, if there are any, and the income potential for you if you want to continue renting out the building.

Use classes

You should already have a clear plan in your mind for what you will be using your commercial property for once you have purchased one. However, you will need to make sure the use class of the property is reviewed to ensure you are allowed to use the building in the way you want to. If it’s not but you still want to proceed with the purchase, you might need to seek planning permission to run your business or make changes to the property.



This is not an exhaustive of everything that is involved before buying a commercial property, but hopefully this checklist has given you a greater insight into some of the key steps that will be part of the process. As experienced commercial conveyancing solicitors in Consett, the team at Toomey Legal can support your commercial investment and ensure the purchase goes as smoothly as possible. Contact us today to learn more about how we can help.