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DUE DILIGENCE FOR RETAIL CENTERS

Updated: Jul 13


These are the items that are critical, and should be on your checklist for due diligence on any retail center:

  • Condition of Roof (is there a warranty / does it transfer to buyer / roof type / are there more than 2 layers on the roof)

  • Geological Reports (what type of soil / any known soil shifting issues / subsidence)

  • Flood Zone Reports (FEMA maps / if not in zone, how close is the nearest flood zone)

  • Development Agreements ( REA reciprocal easement agreements / CC&R covenants, conditions & restrictions)

  • Building Permits (local authority’s approval on dev proj.)

  • Certificate of Occupancy (C.O.) - (local authority document indicating the space is in a compliant condition for occupancy)

  • Certificate of Insurance for Owner (general landlord ins pol F Certificate of Insurance for Tenant (tenant biz ins / slip & fall protection)

  • As Built Plans / Floor Plans (architectural drawings of the build out with potential modifications made afterwards)

  • Survey (basic land survey / *ALTA L1 survey)

  • Engineering Drawings (diagrams of plumbing / electrical / water-sewer plans)

  • Phase One Report (any environmental issues with purchased property or others in proximity with issues)

  • Termite Report (certifies no ongoing active infestation and shows if any past damage)

  • Special Agreements w Utilities/Districts (county/city bonds or special tax financing incentives)

  • Licenses and Permits (make sure tenants all have correct docs to operate in good standing with local authorities)

  • Monthly Operating Statements & expense reports (profit & loss / CAM common area maintenance statements, e.g. lawn care, trash removal, property mgt, etc)

  • Current Rent Roll (complete list of tenants, tenant types, length of lease term remaining)

  • Copies of Tenant Lease(s) (original leases + amendments for review)

  • Copies of Tax Assessments/Bills (multiple years of tax history and payment history / any outstanding balances)

  • Property Management Contracts (agreement to manage the center on behalf of landlord / review the current in-place agreement — decide whether to keep or renew with new co.)

  • Maintenance/Repair Contracts (roof cleaning / landscaping / street lighting / etc.)

  • HVAC Service Contracts (review heating and air contracts / are tenants following cleaning schedules)

  • Trash Contracts (is trash collective by dumpster or individually per tenant)

  • Construction Warranties (roof / parking lot/ building)

  • Inventory of Personal Property (equip / furniture / tools / computers / etc)

  • Seller’s Corporate Documents (is the seller incorporated / valid / in good legal standing / confirm stated seller has authority per corporate bylaws to be legitimized as seller)

  • ECR Agreement (similar to CC&R)

  • Association Cash Reserve Summary (to review health and operation of the association / check for any ongoing or special assessments coming up)

  • Estoppel (whatever is part of that association or lease, as it is written is true and correct, and there are no unwritten agreements)

  • Association Financial Statements (history of association’s methods and future plans if any)

  • Association Articles of Incorporation (validity of docs so as to have the power to make decisions)

  • Association Current Year Operating Expense Report

  • Zoning Confirmation Letter (from city/county confirming property/tenant space is in compliance with zoning law)

  • Placer.ai (shows foot traffic around your potential purchase)

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