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Commercial Real Estate Purchase Checklist
 
 
Home Real Estate Law Commercial Real Estate Purchase Commercial Real Estate Purchase Checklist
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COMMERCIAL REAL ESTATE CHECKLIST    
DESCRIPTION YES/NO  

1.  Zoning/Planning/General Development Policies

 

 

2.  Site Issues

 

 

3.  Building Code/Development Issues

 

 

4.  Existing Structure Issues

 

 

5.  Transactional/Business Issues

 

 

6.  Financial Issues

 

 

7.  Market Issues

 

 

8.  Financial Issues

 

 

 

1.  ZONING/PLANING/GENERAL DEVELOPMENT PLANS

 

 

What jurisdiction is the development?
Are there annexation Plans?
What is current zoning?
What does City or County want there?
Exactly what will City/County allow?
Is there a sunset clause? Amortization or Current Use?
Is current Use Legal?
Can Use be changed?
If can be changed, to what?
What zoning is needed?
What is the process?
Can expansion and/or renovation be made?
What is the rezoning process?
Will the timing work?
What is likelihood of rezoning?
Are there local issues such as politics, neighbors, action groups?
Are there any conditioned zoning requirements?
What is the permit process?
What are the buffer requirements?
Are sizes for berns specificed?
Are there any moratoriums in place or expected?
What is the subdivision process?
Is there a sign ordinance?
What signage is allowed?
How are permits handled? Process, time and costs?
What triggers a permit?
What laws, acts, local ordinances or policies affect this property?
Does the Costal Area Management (CMA) apply?
Does the Mountain Ridge Act (MRA) apply?
What are the watershed regulations?
What are the wetlands rules?
What are the lake setback regulations?
Are there any smart growth policies?
Any general development policies in place? Like measure B?
Property in flood plain or flood ridge?
How current is flood maps?
2.  SITE ISSUES    
Exact size?
Exact shape?
Surveys available?
Site sold off since last survey?
Any encroachments?
Anything look like it may encroach?
What types of survey needed?
     - Boundary?
     - Location?
     - Topography?
     - Subdivision?
     - Construction?
Any Easements?
     - Easements on survey
     - can easements be moved
     What is the process, time & cost involved to chanage?
     How easements affects the land?
     Types of Easements?
         - Power
         - Gas
         - Telecommunications
         - Water
         - Sewer
       - Cable TV
       - Municipal & Public
       - Access
       - Greenery
       - Private access?
       - Easement recorded?
       - Easements not recorded but suspected or visible
Any Right of Way
   - Recorded
   - Not recorded but?
Transitional Right of Way exists?
Additional land taking for flope of road, bridge, etc.
Local &/or State transit issues?
- Transit overlay zoning or additional requirements
- Road improvements program
- Elimination of median custs planned?
Environmental Issues Exists?
- Environmental studies completed? When?
- Wetlands
Watershed
- Local issues
- Drainage Policies
- Looked at property after hard rain?
Legal & Title Issues?
- Title Policy available
- When was it last updated
- Exceptions (Sch. B)
- Verified?
- Legal description
- legal access verified
- deed restrictions
- Use restrictions
Do Subdivions issues exist?
- setbacks
- Approvals needed
- from when?
- Restrictions Covenants (CCRs)
- POA/HOA - pty Owner's Ass'n Details
- Enforcable?
- Violated?
- Architectural Review Committees
       Who?
       How?
       When?
       Why?
       What?
Problems with Taxing Authorities
   - Back taxes paid
   - Assessment amt & rate
- City
- County
- School district
- Utility
- special tax disctrict
- Special Tax assessment
Tax Assessed Policies & Methods
- Protest procedures
- Next valuations
- what is the "word" on the street
Anyone interviewed seller for property history?
Who provides for services? Additional costs?
- Police
- Fire
- emergency
- garbage
- water
- sewer
- electricity
- gas
- cable
- dsl
- wireless internet
- Phone
- VOIP
Minial Rights Issues?
Is Visibility concern?
Anyone announced any changes
3.  BUILDING CODE/ DEVELOPMENT ISSUES    
Which building code used?
Local process when building, repairing or renovating
Any moratoriums in place
Any buffer requirements
Change of Use Permit required
Subdivision Regulations
- What triggers then
- What is the process, timing and costs
Submission required
Political and local issues
Utilities nearby
- Availability
- Cost?
- Process?
- Timetable?
- Political issues?
- anyone can share installation costs?
       Fed, state, county, city, smud, pg&e
- Reimbursable to installer (developer)
What utilities needed?
- Power
- water
- cable to
- telecommunications
- wireless service? For everyone
- Gas
- Cable, DSL
- VOIP
Moratoriums
Soils Suitable
- Test results
- Soils Suitablity analysis
- Compaction? Build 5 Story building
- Percolation?
- Drainage?
- Costs to fix any problem
- Rock reported in Area?
What vegetation on property?
- Existing vs. desired
- Process & permits
Local Issues
- "Dry" counties or towns - can't sell alcohol or some alcohol
     - important to restaurants
How much of site is usable or buildable?
Greenspace required?
Height Limitations in Place
View corridors required?
Impervious Area limitations, if any
What Surrounding Properties Look Like?
Road/Roads a consideration?
- Capacty?
- Are accel/decel lanes required
- Turning lanes required
- Sidewalk requirement, if any
Endangered/protected species in area
4.  EXISTING STRUCTURE ISSUES    
Existing Structure Compliance Problems
Copies of original permits available
Permits in place for alterations
Compliant with ADA
Fire Code issues
Everything Comply with current Bldg Codes?
- anything nonconforming
- amortization period
- senset clause
- what will trigger bringing property to compliance
- Signage legal
- what happens when ownership changes? Ok to new owners
- What happens when USE changes? Ok to new owners
Proper permit in place for tenant's use
Any health issues
Any environmental issues
Must tenant apporve sale
any tenant has 1st right of refusal
Any tenant has Option to purchase
Condition of Exterior?
Parking Lots
   - ADA compliant
- Meet code
- zoning
- Big Enough
- Pavement?
- Striping - needs paint? Right place?
- Traffic patterns
- Site entrance
- Loading areas
- Dumpster pad/trash areas
Signage
Landscaping
Outside irrigation
Sidewalks
Curb
Gutter
Detection & Detention
Fenced
Safety hazards
Health issues
Lighting
Utilities visible
Location of fire hydrants
Who is responsible for maintenance?
- Roof
     type
     condition
     warranty
   - Bldg Exterior (side)
     - Glass
     - Windows
     - Flashing
     - Curtain wall
     - Parapet
     - Foundation
     - Soofit vents
     - Gutter & downspourts
Bilding entrance
- ADA compliant
- Thresholds
- Doors
- Walk_off Matts
- Locks
- Door handle
- Security System
- Smoking urus
- Alarms
     - Fire
     - Theft
     - Other
Building Interior
- Lighting
- emerging lighting
- generator
- ambient lighting
- bulbs & grid condition
- Std size fixtures that are easily replaced
- Ceiling
       grid
       panels
         size, type, easily replaced
- Sign of leaks
- Plenum Area
     Overhead sprinkling, grills, ducts, vents
Signs of Damages
Flooring
- Carpet Condition
- Hardwood
- Vynil
- Stone
- Other
Elevators
- Lst inspected
- type
- speed
- capacity
- maintenance K expiration
- Condition
Exterior Doors & Lobby Area
- Stairs
- Signage legal
- Treads
     Lights
     Doors
Fire Extinguishers
- # s required
- Location
- Charge
Building Signage Condition
- ADA compliant
- Braile
- Tenant Signage
- Lobby
- Directionals
- Emergency
Restrooms
- Location
- Adequate number of bathrooms
- Condition
- Sinks
- commodes
- hardware
- floor dancing
- mirrors
- Paper towel holders
- Toillette paper holders
- Stalls
- ADA compliant
- signs
- evidence of plumbing leaks
Mechanical Rooms
- What is in it
- Who has access
Telecommunications Room
- condition
- Who has access
- policies
- sufficient for tech needs
Maintenance Shop
- Janitor closets
- What is in it
- Who has access
Storage Area
- What is stored
- Adequte inventory of long lead-time items
Pay phones - ADA compliant
Tenant Spaces
- upfitting financed
- fixtures financed
- Compliant w/building, zoning and ADA
Common Areas Shared by Tenants
- mail
- storage
- concession
- kitchen
- breakroom
- other
Attic
- Signs of asbestos
- Signs of pests
- Insulation
Lobby
- Appearance
- finishes
- directions
- furniture
Mechanical systems
- HVAC
     controls
     system
     Condition
     Maintenance Records
     Warranty
     Expiration of maintenance Contracts
5.  Transaction /Business Issues    
Any of these Approvals needed to Close the Sale
- Deed restriction
- 1st Right of Refusal
- Confirm true ownership
- confirm seller's right to contract
Lis pendens
Red flags
Rumours of any kind about the property
Existing loan on property
- Prepayable
- Prepayment penalty
- Terms
- Costs
- Assumable
- Appraisal? Or available
- Appraisal required
- Insurance issues
6.  FINANCIAL ISSUES    
Existing loans
Unrecorded leases
ProFormas
- Current
- Feasible
Lease Audit Taken
- Tenant's right to cancel
- Tenant's right to sublet or assign
- Credit of major tenants
- Right to go dark
- Operating hours
- Continuous operation
- Noncompete clause (tenants and/or landlord)
- Lord right to cancel
- Enforcement (or lack of) lease provisions
Any Reimbursibles
- What
- When
- How
- Why
- Who
Special Tenant Requirements exists
- parking
- HVAC
- Metering
- Cleaning
- Transit
- Right of 1st Refusal
- Expenxe stops
- Assignable leases
- Estoppel reuired? Available
- Expenses Anticipated
     Contracts
       Expiration
       in whose names
Square Footage Confirmed
- Space Measured
- Tenant's leases say?
7.  MARKET ISSUES    
What is market position of subject proerty
- Possibility of repositioning
Market position of surrond properties
- current uses
- "Word on the street"
- Zoning
Market Competition
- Recent comparables
- Status of comparables
What is local Economy Like?
- Current status & proposed changes
- Major industries
- government
- Financial issues
- Policits: CSUS, liberal, conservative, growth,
- Local issues - growth, stop growth, more housing
Construction of the Roads
- Current
- Planned
- New roads
- Traffic Count
- Major Corridor
Interviewed the following with an expert?
- Owner
- Old timers in the area
- Adjacent owner
- Planning, zoning, building code officers
- Elected officials
- Tenants
What are the Demographics?
- Current
- projections
- trade area
Other Developments in Area
Location of Amenities
- Restaurants
- Residentials
- Hospitals
- Shopping
- Education
- Arts
8.  PERSONAL ISUES    
Any personal issues with buyer or seller?
- Reputation
- Motivation
Broker involved
- reputation
- motivation
Does buyer or seller own other properties
- next door
- close
- restrictions
Are there any warranties & indemnifications?
- financial stability
- Can buyer and seller close
- Willingness to creatively structure
If Seller?
- When acquired property
- Price and terms
- Why is seller selling?
If Buyer?
- What recent property buyer bought?
- Price & terms
- When Acquired?
 
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