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Property Due Diligence Checklist
Section 1: Financials
1. 1. Is the rent roll reviewed?
Yes
No
N/A
2. 2. Are the leases including amendments, extensions, modifications, guarantees, and estoppels reviewed?
Yes
No
N/A
3. 3. Are the lease abstracts reviewed?
Yes
No
N/A
4. 4. Are the accounts receivable and delinquencies reviewed?
Yes
No
N/A
5. 5. Are the reconciliations (if any) reviewed?
Yes
No
N/A
6. 6. Is the balance sheet for the past three years reviewed?
Yes
No
N/A
7. 7. Is the check register for the prior year and year-to-date reviewed?
Yes
No
N/A
8. 8. Is the general ledger for the prior year and year-to-date completed?
Yes
No
N/A
9. 9. Are the sales histories for tenants year-to-date, and the last three years' report checked?
Yes
No
N/A
10. 10. Are the tax bills for the past three years reviewed?
Yes
No
N/A
11. 11. Is the schedule of CapEx for the past three years and the current budget reviewed?
Yes
No
N/A
12. 12. Is the recovery worksheet for CTI reviewed?
Yes
No
N/A
13. 13. Is the current month's TI reviewed?
Yes
No
N/A
14. 14. Is the schedule of tenants' security deposits reviewed?
Yes
No
N/A
15. 15. Is the schedule of any outstanding TI and/or leasing commissions reviewed?
Yes
No
N/A
16. 16. Are the utility records reviewed?
Yes
No
N/A
17. 17. Are the current invoices for service contract providers and utilities reviewed?
Yes
No
N/A
18. 18. Is the insurance quote reviewed?
Yes
No
N/A
19. 19. Is a copy of the loss report from the insurance company for the last three years reviewed?
Yes
No
N/A
Section 2: Building
1. 1. Are the site plans and building plans (including any warranties from subcontractors) reviewed?
Yes
No
N/A
2. 2. Is the existing Phase I report reviewed?
Yes
No
N/A
3. 3. Is the insurance quote reviewed?
Yes
No
N/A
4. 4. Are the POA documents (if applicable) reviewed?
Yes
No
N/A
5. 5. Are the easement agreements (if any) reviewed?
Yes
No
N/A
6. 6. Are the building service contracts (including leasing and property management) reviewed?
Yes
No
N/A
7. 7. Is the building maintenance log and CapEx reviewed?
Yes
No
N/A
8. 8. Are the warranties reviewed?
Yes
No
N/A
9. 9. Is the property management agreement reviewed?
Yes
No
N/A
10. 10. Are the tenants contacted, and is a contact list created?
Yes
No
N/A
Section 3: Acquisition Actions / Documents
1. 1. Is the Letter of Intent signed?
Yes
No
N/A
2. 2. Is the Investment Committee presentation created and approved?
Yes
No
N/A
3. 3. Are due diligence materials requested and obtained?
Yes
No
N/A
4. 4. Is legal counsel selected?
Yes
No
N/A
5. 5. Is UBIT/ERISA counsel selected?
Yes
No
N/A
6. 6. Is the 1st draft of the Purchase Contract obtained and reviewed?
Yes
No
N/A
7. 7. Is the 2nd draft of the Purchase Contract obtained and reviewed?
Yes
No
N/A
8. 8. Is the 3rd draft of the Purchase Contract obtained and reviewed?
Yes
No
N/A
9. 9. Is the 4th draft of the Purchase Contract obtained and reviewed?
Yes
No
N/A
10. 10. Is the 5th draft of the Purchase Contract obtained and reviewed?
Yes
No
N/A
11. 11. Is the Access Agreement obtained?
Yes
No
N/A
12. 12. Is the Client Authorization Letter obtained?
Yes
No
N/A
13. 13. Is the Portfolio Manager Authorization Letter obtained?
Yes
No
N/A
14. 14. Is the fully executed Purchase Contract obtained and reviewed?
Yes
No
N/A
15. 15. Is a copy of the fully executed Contract delivered into escrow?
Yes
No
N/A
16. 16. Is the Buyer’s initial LC or cash deposit with the Escrow Holder arranged?
Yes
No
N/A
17. 17. Is the investment of the Buyer’s initial cash deposit arranged?
Yes
No
N/A
18. 18. Is the Independent Contract Consideration provided to the Seller?
Yes
No
N/A
19. 19. Is the funding schedule prepared and forwarded to the portfolio manager/client?
Yes
No
N/A
20. 20. Is the name of the acquiring (title-holding) entity obtained?
Yes
No
N/A
21. 21. Are the required bank accounts set up?
Yes
No
N/A
22. 22. Is the fully executed 1st Amendment to the Purchase Contract obtained?
Yes
No
N/A
23. 23. Is the fully executed 2nd Amendment to the Purchase Contract obtained?
Yes
No
N/A
Section 4: Title/Survey/Zoning Matters
1. 1. Is a title company selected?
Yes
No
N/A
2. 2. Are the Seller’s title commitment and underlying documents received, reviewed, and forwarded to the title company?
Yes
No
N/A
3. 3. Are the current title commitment and underlying documents ordered?
Yes
No
N/A
4. 4. Are UCC and judgment line searches conducted?
Yes
No
N/A
5. 5. Is the existing survey received and reviewed?
Yes
No
N/A
6. 6. Is a new ALTA survey (or update) ordered?
Yes
No
N/A
7. 7. Are subdivision and parcel maps obtained?
Yes
No
N/A
8. 8. Are restrictive covenants, easements, and agreements reviewed?
Yes
No
N/A
9. 9. Is local improvement district information gathered?
Yes
No
N/A
10. 10. Are leases, entitlements, and other assets verified to be in the seller’s name, or are appropriate assignment documents obtained?
Yes
No
N/A
11. 11. Are releases from current lienholders confirmed as available (if applicable)?
Yes
No
N/A
12. 12. Is the title and survey objection letter delivered to the Seller (if applicable)?
Yes
No
N/A
Section 5: Tenant/Lease Matters
1. 1. Are issues regarding leases resolved?
Yes
No
N/A
2. 2. Are Tenant Correspondence Files reviewed?
Yes
No
N/A
3. 3. Are expense pass-throughs/CAM charges compared to Operating Statements?
Yes
No
N/A
4. 4. Are cost pools reviewed for overcharges to tenants?
Yes
No
N/A
5. 5. Are tenant sales reports received and reviewed?
Yes
No
N/A
6. 6. Is the list of security deposits received and reviewed?
Yes
No
N/A
7. 7. Is the aged receivables report received and reviewed?
Yes
No
N/A
8. 8. Is tenant credit information and payment history reviewed?
Yes
No
N/A
9. 9. Are leases reviewed for any contractual landlord obligations (e.g., construction, payments to the tenant)?
Yes
No
N/A
10. 10. Is the square footage between Leases and Rent Roll compared?
Yes
No
N/A
11. 11. Are Tenant Estoppel Certificates prepared?
Yes
No
N/A
12. 12. Are signed Tenant Estoppel Certificates reviewed?
Yes
No
N/A
13. 13. Are signed estoppels cross-checked against the rent/deposit schedule?
Yes
No
N/A
Section 6: Financial Matters
1. 1. Are copies of historical and pro forma financial information received and reviewed?
Yes
No
N/A
2. 2. Are utility bills (electric, water, gas) received and reviewed?
Yes
No
N/A
3. 3. Are the most recent tax statements and related information received and reviewed?
Yes
No
N/A
4. 4. Are all expenses of operating the property verified to be reflected in the financial information provided by the seller?
Yes
No
N/A
5. 5. Are expenses compared to comparable building data?
Yes
No
N/A
6. 6. Are past and budgeted capital improvements received and reviewed?
Yes
No
N/A
Section 7: Service Contracts
1. 1. Are service contracts received and reviewed?
Yes
No
N/A
2. 2. Are all service contracts terminable without penalty verified?
Yes
No
N/A
3. 3. Is the assignability of service contracts confirmed?
Yes
No
N/A
4. 4. Are the contracts to be transferred approved and the Seller notified?
Yes
No
N/A
Section 8: Litigation
1. 1. Is the litigation list reviewed (if applicable)?
Yes
No
N/A
2. 2. Is the existence of contingent liabilities or open claims against the property determined?
Yes
No
N/A
Section 9: Insurance
1. 1. Is an insurance quote obtained from Risk Management?
Yes
No
N/A
2. 2. Is the third-party Property Management Agreement reviewed for adequacy of insurance coverage?
Yes
No
N/A
3. 3. Is information provided to Risk Management for the final Certificate of Insurance?
Yes
No
N/A
Section 10: Physical Property Inspection And Review
1. 1. Is the current Certified Rent Roll obtained?
Yes
No
N/A
2. 2. Are the Leases, Amendments, and all related documents received and reviewed, and are Lease Summaries prepared?
Yes
No
N/A
3. 3. Is Legal Counsel engaged to review Leases and prepare Lease Summaries?
Yes
No
N/A
4. 4. Are Internal Lease Summaries compared to Legal Counsel’s Lease Summaries?
Yes
No
N/A
5. 5. Are Lease Summaries compared with the Rent Roll and Pro Forma?
Yes
No
N/A
6. 6. Are Tenant Lease Files reviewed?
Yes
No
N/A
7. 7. Are as-built plans/specs (electrical, mechanical, structural) received and reviewed?
Yes
No
N/A
8. 8. Are existing inspection reports (roofing, HVAC, seismic, soils) received and reviewed?
Yes
No
N/A
9. 9. Is a current engineering report (Property Condition Assessment) ordered, including structural, mechanical, code compliance, and ADA compliance?
Yes
No
N/A
10. 10. Are existing environmental reports and studies received and reviewed?
Yes
No
N/A
11. 11. Is a current Phase I Environmental Site Assessment ordered?
Yes
No
N/A
12. 12. Is a current Additional Site Investigation (Phase II) ordered?
Yes
No
N/A
13. 13. Are building permits, licenses, and certificates of occupancy received and reviewed?
Yes
No
N/A
14. 14. Is parking verified to be adequate (i.e., governmental regulations, practical requirements, lease requirements)?
Yes
No
N/A
15. 15. Is the approximate square footage of improvements verified?
Yes
No
N/A
16. 16. Is the utility site plan reviewed, adequate utility hook-ups verified, all utility hook-up fees verified as paid, and requirements for utility deposits identified?
Yes
No
N/A
17. 17. Are energy usage reports reviewed and usage compared to expenses?
Yes
No
N/A
18. 18. Is the amount of available wattage per square foot verified and compared to the market?
Yes
No
N/A
19. 19. Are construction contracts/subcontracts received and reviewed?
Yes
No
N/A
20. 20. Are building warranties/guarantees received and reviewed?
Yes
No
N/A
21. 21. Is a list of personal property and trade/service names received?
Yes
No
N/A
22. 22. Are copies of liability, casualty, and other insurance received?
Yes
No
N/A
23. 23. Are site plans, leasing brochures, maps, and photographs received and reviewed?
Yes
No
N/A
Section 11: Personal Property Inventory
1. 1. Is the list of personal property received and reviewed?
Yes
No
N/A
2. 2. Is it verified that no material personal property is omitted from the personal property list?
Yes
No
N/A
3. 3. Is it verified that the personal property is in good operating condition?
Yes
No
N/A
Section 12: Governmental Review
1. 1. Are licenses and permits reviewed to verify no breach, satisfaction of all conditions, current ownership, and necessity of transfer?
Yes
No
N/A
2. 2. Are certificates of occupancy for property and tenant spaces verified?
Yes
No
N/A
3. 3. Is proper zoning verified, and a zoning letter obtained?
Yes
No
N/A
4. 4. Do improvements comply with governmental regulations?
Yes
No
N/A
5. 5. Are there no transferred development rights?
Yes
No
N/A
6. 6. Are there no existing contemplated assessments?
Yes
No
N/A
7. 7. Are there no pending rezoning?
Yes
No
N/A
8. 8. Are there no pending administrative proceedings, governmental plans, or studies?
Yes
No
N/A
9. 9. Is there no utility moratorium?
Yes
No
N/A
Section 13: Closing And Miscellaneous Actions
1. 1. Is the seller notified of any breach or misrepresentation discovered during the due diligence review?
Yes
No
N/A
2. 2. Is the aggregate cost of correcting any problems discovered through due diligence determined?
Yes
No
N/A
3. 3. Are any necessary changes to forms of closing documents initiated?
Yes
No
N/A
4. 4. Are authority documents prepared and approved?
Yes
No
N/A
5. 5. Is current financial information requested from the Seller for prorations?
Yes
No
N/A
6. 6. Are prorations for taxes and assessments confirmed?
Yes
No
N/A
7. 7. Are prorations for utilities confirmed?
Yes
No
N/A
8. 8. Are prorations for rents confirmed?
Yes
No
N/A
9. 9. Are prorations for permit and license fees confirmed?
Yes
No
N/A
10. 10. Are prorations for utility deposits confirmed?
Yes
No
N/A
11. 11. Are prorations for operating accounts confirmed?
Yes
No
N/A
12. 12. Are prorations for obligations under contracts confirmed?
Yes
No
N/A
13. 13. Are prorations for security deposits confirmed?
Yes
No
N/A
14. 14. Are prorations for closing costs confirmed?
Yes
No
N/A
15. 15. Are prorations for commissions, tenant improvements, or other leasing expenses confirmed?
Yes
No
N/A
16. 16. Are prorations for any other apportionments confirmed?
Yes
No
N/A
17. 17. Is the schedule of the Buyer’s title-related costs requested from the title company?
Yes
No
N/A
18. 18. Is the schedule of estimated closing costs prepared?
Yes
No
N/A
19. 19. Is the form of Tenant Notice prepared and distributed?
Yes
No
N/A
20. 20. Is the assignment of the Purchase Contract prepared?
Yes
No
N/A
21. 21. Is the Buyer’s replacement/additional cash deposit arranged?
Yes
No
N/A
22. 22. Is the investment of the Buyer’s replacement/additional cash deposit arranged?
Yes
No
N/A
23. 23. Is the return receipt of the initial LC confirmed and returned to the bank?
Yes
No
N/A
24. 24. Is the initial/additional cash deposit return receipt confirmed?
Yes
No
N/A
25. 25. Is the bank instructed to transfer the returned cash deposit to the line of credit?
Yes
No
N/A
26. 26. Is the schedule of the Buyer’s funding into escrow prepared?
Yes
No
N/A
27. 27. Are the buyer’s purchase proceeds arranged to be funded into escrow?
Yes
No
N/A
28. 28. Are the buyer’s purchase proceeds arranged to be invested overnight?
Yes
No
N/A
29. 29. Are closing escrow instructions and exhibit documents reviewed?
Yes
No
N/A
30. 30. Are the original documents delivered to the property manager coordinated?
Yes
No
N/A
31. 31. Is the closing statement obtained and reviewed?
Yes
No
N/A
32. 32. Is the funds recording/disbursement confirmed?
Yes
No
N/A
33. 33. Is property/liability insurance in place confirmed?
Yes
No
N/A
34. 34. Is a letter sent to the client confirming closing (with closing statement/funding schedules)?
Yes
No
N/A
35. 35. Is counsel instructed to distribute the closing binders?
Yes
No
N/A
Section 14: Property Operations And Management
1. 1. Is a Property Management company selected?
Yes
No
N/A
2. 2. Is the Property Management Agreement finalized?
Yes
No
N/A
3. 3. Are the financial terms of the Property Management Agreement reflected in the proforma?
Yes
No
N/A
4. 4. Is a leasing company selected?
Yes
No
N/A
5. 5. Are Service Contracts verified to be on the market?
Yes
No
N/A
6. 6. Are there no disputes with brokers, suppliers, or employees?
Yes
No
N/A
7. 7. Are there no existing or contemplated labor strikes?
Yes
No
N/A
8. 8. Are all obligations and trade creditors being paid in the normal course?
Yes
No
N/A
9. 9. Are property management files reviewed?
Yes
No
N/A
10. 10. Are warranties and expiration dates reviewed?
Yes
No
N/A
11. 11. Are maintenance schedules for equipment, repairs, and maintenance expenses reviewed?
Yes
No
N/A
Section 15: Financing Matters (If Applicable)
1. 1. Is a Mortgage Consultant contacted?
Yes
No
N/A
2. 2. Is property information provided to the Mortgage Consultant?
Yes
No
N/A
3. 3. Are Loan Quotes received and reviewed?
Yes
No
N/A
4. 4. Is a Lender selected?
Yes
No
N/A
5. 5. Is a Signed Loan Commitment obtained?
Yes
No
N/A
6. 6. Are Loan Commitment Fees arranged for payment?
Yes
No
N/A
7. 7. Is the Loan Application received, reviewed, and negotiated?
Yes
No
N/A
8. 8. Is a Signed Loan Application obtained?
Yes
No
N/A
9. 9. Are requested documents provided to the Mortgage Consultant/Lender?
Yes
No
N/A
10. 10. Are Loan Documents finalized and signed?
Yes
No
N/A
11. 11. Are Financing Proceeds funded?
Yes
No
N/A
Section 16: Internal Procedures And Reporting
1. 1. Is a property visit confirmed by an Asset Management and Management Committee member?
Yes
No
N/A
2. 2. Are all client-specific acquisition requirements met?
Yes
No
N/A
3. 3. Is a transition memo issued to Asset Management, Property Management, and Accounting (if applicable)?
Yes
No
N/A