A commercial purchase and sale agreement almost always includes a due diligence period — typically 30 to 60 days — during which you can walk away and get your earnest money back if something doesn't check out. That window is only useful if you actually verify everything it's meant to catch. Here's what a thorough commercial due diligence process covers, asset class aside.
Title and survey
A title commitment shows you what you're actually buying — easements, liens, restrictive covenants, and anything else recorded against the property. An ALTA/NSPS survey confirms boundaries, encroachments, and easement locations on the ground, not just on paper. Don't assume the seller's existing survey is current enough to rely on; lenders in particular often require a new or updated one.
Zoning and land use
Confirm the current use is actually permitted under current zoning, not grandfathered in as a nonconforming use that could complicate a future renovation or expansion. Check for any pending rezoning applications nearby that could affect the property's value or use, and review deed restrictions or covenants that might limit what you can do with the site.
Environmental — the Phase I ESA
A Phase I Environmental Site Assessment follows the ASTM E1527 standard and covers a site visit, a review of federal and state environmental records, historical aerial photography, and interviews about the property's past use — it does not include soil or groundwater sampling; that's a Phase II, triggered only if the Phase I flags a specific concern. Conducting a Phase I creates an "innocent landowner" defense under federal Superfund law (CERCLA), protecting you from cleanup liability for contamination a prior owner caused. Most commercial lenders require one before funding, regardless of whether you'd order one on your own.
Financial due diligence
Pull the rent roll and trailing 12-month (T-12) operating statements and check them against actual leases, not just the seller's summary. Get tenant estoppel certificates — a signed statement from each tenant confirming their rent, term, and that there are no undisclosed defaults or side agreements. If the property has debt you're assuming or a lender involved, you may also need a Subordination, Non-Disturbance, and Attornment (SNDA) agreement, which is a different document: it protects a tenant's lease if the lender forecloses, in exchange for the tenant recognizing the lender's superior claim.
Physical condition
A property condition assessment (PCA) covers structural, roof, HVAC, electrical, and plumbing systems and estimates remaining useful life and near-term capital needs — the kind of information you want before you're locked into a purchase price, not after. An ADA compliance review matters for any property with public-facing space, since retrofits can be expensive and aren't always optional.
Legal and entity review
Review every service contract on the property (landscaping, HVAC maintenance, security, elevator) for whether it's assignable to you or terminable on sale. Run a litigation and UCC lien search against the seller and the property itself. If you're buying through an LLC or other entity, confirm the entity's authority to sell and that the signatory actually has the power to bind it.
Insurance and financing
Review the property's loss history and current insurance coverage, and start your lender conversations early — a lender's own due diligence requirements (appraisal, Phase I ESA, PCA) often set the real pace of your timeline more than your own checklist does. See our commercial real estate loans guide for what lenders look for on the financing side.
What we look at with you
We build the due diligence timeline into the letter of intent and contract from the start, rather than discovering the real deadline pressure once you're already under contract — coordinating your inspection period against your lender's own requirements, your 1031 exchange deadlines if the purchase is a replacement property, and whether a cost segregation study should be lined up before or right after closing. The specifics shift by asset class — industrial, multifamily, office, retail, and Southern Indiana properties each carry their own diligence emphasis, and we bring in the right specialists (title, environmental, engineering) rather than trying to cover every category ourselves.
Frequently asked questions
How long is a typical commercial due diligence period?
Most commercial purchase and sale agreements set a 30- to 60-day due diligence period, though it can run longer for complex properties or shorter in a competitive bidding situation. The period is negotiated as part of the contract, not fixed by law.
What is a Phase I Environmental Site Assessment and do I need one?
It's a records review and site inspection, following the ASTM E1527 standard, that identifies potential environmental contamination without any soil or groundwater testing. Most commercial lenders require one before funding, and it also protects you from certain cleanup liability under federal law even if you finance with cash.
What's the difference between an estoppel certificate and an SNDA?
An estoppel certificate is the tenant confirming their lease terms and status directly to you as the buyer — rent, term, no undisclosed defaults. An SNDA is a three-way agreement involving the tenant, the lender, and the landlord that protects the tenant's lease if the lender ever forecloses. They serve different purposes and you may need both.
What happens if I find a problem during due diligence — can I cancel?
Most commercial contracts give the buyer the right to terminate for any reason during the due diligence period and get earnest money back, though the exact terms depend on what's negotiated in your specific purchase and sale agreement — always confirm your termination rights before you sign.
Do I need a new survey, or can I use the seller's existing one?
It depends on how current the existing survey is and whether your lender or title company will accept it. Many lenders require a new or updated ALTA/NSPS survey regardless of what the seller has on file, so it's worth confirming early rather than assuming the old one is sufficient.
What should I check on service contracts before closing?
Whether each contract (landscaping, HVAC maintenance, security, elevator, and similar) is assignable to you as the new owner or terminable on sale, what the remaining term and cancellation notice period are, and whether the pricing is at or above market — an assumed contract at an inflated rate is an ongoing cost you're inheriting, not a one-time issue.