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Commercial Real Estate Due Diligence Checklist

| John M. McCormick | ,

Quick Answer

A commercial real estate due diligence checklist covers title, survey, zoning, environmental condition, physical condition, leases, service contracts, permits, flood zone status, lien risk, financing, and the entity that will take title. Because commercial buyers in Virginia and North Carolina receive no statutory seller disclosures, due diligence is how the buyer learns what it is buying. Every item should be finished before the due diligence or examination period ends, since the deposit is usually at risk after that date.

This article is part of our Legal Guide to Commercial Real Estate in Virginia and North Carolina.

Commercial property is sold largely on a buyer-beware basis. Virginia’s and North Carolina’s residential disclosure statutes apply only to properties with 1 to 4 residential units (Va. Code § 55.1-701; G.S. Chapter 47E), so the seller of an office building, warehouse, or retail center generally has no statutory duty to fill out a disclosure form. What you learn, you learn through your own investigation and the representations you negotiate in the commercial real estate purchase agreement.

The checklist below is a practical starting point. Not every item applies to every deal, but skipping one should be a deliberate choice.

What should a commercial real estate due diligence checklist include?

CategoryWhat to Obtain or ReviewWhy It Matters
TitleTitle commitment, Schedule B exceptions, recorded easements and restrictions, existing title policyShows who owns the property, what liens and encumbrances exist, and what the title policy will not cover.
SurveyALTA/NSPS Land Title Survey under the 2026 standards, with selected Table A itemsReveals boundaries, encroachments, access, and easement locations; supports title endorsements.
Zoning and land useZoning classification, permitted uses, parking, nonconforming status, open violations, zoning letterConfirms your intended use is allowed and whether the existing building can continue as is and be rebuilt after damage.
EnvironmentalPhase I ESA under ASTM E1527-21; Phase II if recommendedGenerally needed to qualify for CERCLA landowner defenses and often required by lenders.
Physical conditionProperty condition report, roof, HVAC, structural, ADA reviewIdentifies repair costs and capital needs before the deposit goes hard.
LeasesAll leases and amendments, rent roll, tenant estoppels, SNDAs, security depositsConfirms the income you are paying for and surfaces disputes, options, and rent credits.
Service contractsManagement, maintenance, landscaping, security, and equipment lease agreementsDetermines which contracts you assume and which the seller must terminate.
Permits and certificatesCertificates of occupancy, building permits, operating licensesShows whether improvements were approved and whether permits transfer.
Flood zoneFEMA flood zone determination, insurance quotesFederally regulated lenders require flood insurance for loans on improved property in special flood hazard areas.
Coastal and shoreline rulesChesapeake Bay Preservation Area status (Hampton Roads); CAMA area of environmental concern (NC coast)Can limit expansion, redevelopment, and site work near water.
Mechanic’s lien riskRecent construction history, owner’s affidavit, NC lien agent designationLiens for recent work can be filed after closing.
TaxesTax bills, assessments, land-use assessment status in VirginiaA change to a nonqualifying use or an owner-requested rezoning may trigger rollback taxes.
FinancingLoan commitment, appraisal, lender’s survey, insurance, and entity requirementsYour lender’s conditions often drive the closing timeline.
Entity setupFormed LLC, operating agreement, EIN, bank account, assignment of contractThe buyer entity must exist and be authorized before closing.

What should you look for in title and survey?

The title commitment lists the requirements to close and the exceptions the policy will not cover. Each Schedule B exception should be read against the survey to see whether a recorded easement runs under the building or blocks access. Commercial buyers often request endorsements, such as zoning, access, contiguity, and survey endorsements, though availability depends on the state and insurer.

ALTA/NSPS surveys are now governed by the 2026 Minimum Standard Detail Requirements, effective February 23, 2026. Optional Table A items, such as flood zone, zoning, and utilities, must be specifically selected. Our article on title insurance and ALTA surveys covers this in detail.

How do you confirm zoning?

Start with the zoning map and ordinance, then confirm with the locality. A written determination from the zoning administrator can be valuable. In Virginia, an appeal of a zoning administrator’s decision must be filed within 30 days (Va. Code § 15.2-2311(A)). In North Carolina, appeals of most staff decisions to the board of adjustment are due within 30 days after the owner receives written notice (G.S. 160D-405). Both states have amended their vesting statutes recently, so confirm current law for the specific project. See zoning and land use due diligence and our land use and zoning practice.

Why does a Phase I environmental site assessment matter?

A Phase I ESA is the main tool for protecting a buyer from federal cleanup liability under CERCLA. The bona fide prospective purchaser, innocent landowner, and contiguous property owner defenses (42 U.S.C. §§ 9601(40), 9601(35), 9607(q), 9607(r)) each require “all appropriate inquiries” before acquisition, plus continuing obligations after closing, such as taking reasonable steps to stop or prevent releases, cooperating with response actions, and complying with land use restrictions. Knowing about contamination does not by itself defeat bona fide prospective purchaser status, but the property can still be subject to a federal windfall lien if a government-funded cleanup increased its value (42 U.S.C. § 9607(r)).

The current standard is ASTM E1527-21, recognized in EPA’s All Appropriate Inquiries rule (40 CFR Part 312). Timing matters. The inquiry must be done within one year before acquisition, and key components (interviews with past and present owners and occupants, searches for environmental cleanup liens, government records review, a visual inspection of the property and adjoining properties, and the environmental professional’s declaration) must be done or updated within 180 days before acquisition (40 CFR 312.20). An older report prepared for the seller generally will not satisfy the rule unless it is updated within those time limits. In North Carolina, a brownfields agreement with NC DEQ under the Brownfields Property Reuse Act (G.S. 130A-310.30 et seq.) can limit a prospective developer’s remediation liability for the contamination identified in the agreement, as long as the developer complies with the agreement and its land-use restrictions. Liability can be reopened, for example, for false information, previously unreported contamination, or violations of the restrictions (G.S. 130A-310.33).

What should you review on physical condition, leases, contracts, and permits?

A property condition report helps price roof, mechanical, and structural work. If the property is open to the public, consider accessibility: under 28 CFR 36.201(b), both the landlord and the tenant of a place of public accommodation are responsible for ADA Title III compliance, and a lease allocation does not change that as to third parties.

For leased property, compare the rent roll to every lease and amendment. Tenant estoppel certificates confirm rent, deposits, defaults, and options from the tenant’s side. Service contracts should be reviewed to decide which you will assume. Certificates of occupancy and permits confirm that the improvements and current use were approved.

Why check the flood zone, even for an inland property?

Lenders regulated by federal agencies may not make, increase, extend, or renew a loan secured by improved real estate in a FEMA special flood hazard area unless flood insurance is maintained for at least the lesser of the outstanding loan balance or the maximum coverage available under the National Flood Insurance Program (42 U.S.C. § 4012a(b)). The rule applies to commercial as well as residential collateral. In Hampton Roads and coastal North Carolina, flood status can affect insurance cost, lender approval, and resale value. Get the determination and an insurance quote early.

How do Virginia and North Carolina due diligence rules differ?

Shoreline rules. Under the Chesapeake Bay Preservation Act (Va. Code § 62.1-44.15:67 et seq.), Tidewater localities, including Norfolk, Virginia Beach, Chesapeake, Portsmouth, Suffolk, Hampton, and Newport News, must designate Chesapeake Bay Preservation Areas that limit development near shorelines and wetlands. On the North Carolina coast, a CAMA permit is required for development in an area of environmental concern (G.S. 113A-118), which matters for Outer Banks property.

Mechanic’s liens. In Virginia, a lien memorandum must be recorded within 90 days after the last day of the month in which the claimant last performed work, and no later than 90 days after the project is completed or work ends (Va. Code § 43-4). Liens can appear after closing, so title companies require owner’s affidavits and buyers often ask for mechanic’s lien coverage. In North Carolina, a claim of lien must be filed within 120 days after last furnishing (G.S. 44A-12). For improvements costing $40,000 or more, other than improvements to an existing owner-occupied single-family home, the owner must designate a lien agent no later than its first improvement contract (G.S. 44A-11.1), and contractors and suppliers who do not notify the lien agent within 15 days of first furnishing, or at least before the sale or loan is recorded, generally cannot perfect a lien against a bona fide purchaser, and their lien becomes subordinate to a later lender’s deed of trust (G.S. 44A-11.2). Closing attorneys check with the lien agent before recording.

Rollback taxes. Virginia property taxed under land-use assessment can face rollback taxes, generally the deferred tax for the five most recent complete tax years plus simple interest, if the use changes to a nonqualifying use or the owner requests a rezoning to a more intensive use (Va. Code § 58.1-3237). A change of title alone does not trigger it. For more state-specific steps, see our guides to closing in Virginia and North Carolina.

What financing and entity issues belong on the checklist?

Your lender will have its own list, often including an appraisal, survey, insurance, environmental report, and SNDAs. SBA borrowers buying owner-occupied property must occupy at least 51 percent of an existing building, or at least 60 percent for new construction (13 CFR 120.131). If the property is held by a separate real estate entity that leases the whole building to the operating business, the operating company must meet the occupancy test.

Most investors take title in an LLC. The entity should be formed, with an operating agreement and bank account in place, before closing, and the contract should allow assignment to it. See holding commercial real estate in an LLC.

Attorney Insight

I tell clients to order the title commitment, survey, and Phase I the day the contract is signed, not after they have looked around for a few weeks. Those three items take the longest and drive most objections. If something turns up late in the period, you want time to negotiate, not just time to decide whether to walk away.

Frequently Asked Questions

How long does commercial due diligence take?

It depends on the property and the contract. Simple single-tenant deals may move quickly, while multi-tenant or development properties typically need more time. The contract’s due diligence or examination period sets the deadline.

Can I rely on the seller’s existing Phase I report?

Usually not by itself. To support CERCLA defenses, the inquiry must be within one year before your acquisition, with key components done or updated within 180 days. Ask your environmental professional whether an update can be prepared for you or whether a new report is needed.

Does a commercial seller have to disclose problems?

Neither Virginia nor North Carolina requires a statutory disclosure form for commercial property. However, concealment of a material fact can still be fraud in Virginia, and negotiated representations in the contract add protection.

What is a tenant estoppel certificate?

It is a signed statement from a tenant confirming the lease terms, rent, deposit, and whether any defaults or claims exist. Buyers and lenders rely on it to confirm the rent roll.

Related Articles in This Guide

Get a Due Diligence Plan Before Your Clock Starts

McCormick Law & Consulting represents buyers, sellers, landlords, tenants, investors, and lenders in commercial real estate matters in Virginia and North Carolina. Because we also form and advise businesses every day (roughly a thousand new entities formed and hundreds of businesses currently represented), we look at a property deal from the operating side as well as the legal side. Every transaction is different, and past results do not predict the outcome of yours.

We can help you build a due diligence schedule around your contract deadlines, review title and survey, and coordinate with your lender and consultants. Learn more about our real estate transactions practice.

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This article provides general information only. It is not legal, tax, or financial advice and does not create an attorney-client relationship. Laws differ by state and change over time. Our attorneys are licensed in Virginia and North Carolina. We assist clients with business transactions involving multiple states. For matters involving the law of a state where we are not licensed, we associate with appropriately licensed counsel or otherwise proceed only as permitted by applicable law.