Focus on the environment: Site Due Diligence

In a site due diligence process, prospective buyers systematically check all facts related to commercial real estate. Site due diligence deals with legal, tax, technical and environmental aspects.

In the site due diligence process, the seller must first prove ownership by means of purchase contracts and currently certified land register excerpts with a site plan and dimensioned property map. Then it is a matter of the possible uses, which can be substantiated with a land use plan, building permits and a complete list of building encumbrances. Concerning the buildings, a development plan, drawings, cable and line plans and documents about the structural analysis are helpful. In the case of older buildings, a statement about possible preservation orders is useful. A confirmation that there is no right of first refusal is also important.

The condition of the commercial property is also recorded. This can be done using appraisals prepared by specialist real estate appraisers. Such appraisals can include maintenance contracts, documentation of inspections performed (elevators, heating, air conditioning, etc.) and lists of defects. An energy performance certificate completes the documentation. Lease agreements are also assessed as part of site due diligence.

In addition, relevant aspects of environmental pollution are also included in site due diligence. Contaminated sites can lead to an extraordinary burden and are therefore recorded or excluded with special care. Environmental notices from authorities, reports on environmental audits, contaminated site reports and documents on the previous use of the commercial property can be informative documents.

Paying attention to the environmental aspects related to a business site contribute to sustainable operations.

Finally, a site due diligence process will include the status of payment of property taxes and premiums for existing insurances (especially builder’s liability, construction liability and property insurance).


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