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FAQs

What kinds of due diligence conditions would be appropriate for the purchase of a commercial property?

Buyers of commercial property need to perform a variety of due diligence investigations before firmly committing to purchase. Environmental due diligence would include a Phase 1 and Phase 2 environmental assessment of the property to determine if any contamination or hazardous conditions exist on the property for which remediation is necessary. A comprehensive building inspection should be undertaken to assess the structural integrity of the building on the property and to evaluate the condition and maintenance of the building, including the foundations, roof, HVAC, electrical, plumbing, and other building systems. It is also wise to research the official plan designation and zoning bylaws applicable to the property, building code compliance and whether any outstanding building permits or work orders exist. Other off-title searches should be undertaken, such as fire code compliance, heritage designations and technical safety standards. The status of taxes should be examined to determine if any taxes or special assessments are outstanding. A title search and survey review should be completed to confirm outstanding encumbrances and any boundary or encroachment issues. If there are tenants, an examination should be undertaken of the rent roll and the signed leases, together with tenant acknowledgments confirming the terms of the leases and that they are in good standing. A buyer can include financing conditions, approvals by its board of directors, or even broader economic feasibility conditions in order to be satisfied that it may develop or use the property as it intends in the future.

© 2015 Lawrence, Lawrence, Stevenson LLP

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Telephone: 905.451.3040 Fax: 905.451.5058 Email: lls@lawrences.com

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