A commercial real estate due diligence checklist has two halves, the property and the parties, and many commercial property due diligence checklists spend nearly all their lines on the property. This one covers the parties. For each person or company on a commercial real estate (CRE) deal, from the seller and sponsor to tenants, contractors and the property manager, it lists what to confirm in entity records, the principals behind them, liens, judgments, Uniform Commercial Code (UCC) filings, litigation and licenses.
Title commitments, surveys, property condition reports, environmental site assessments and zoning letters belong to your counsel, your engineers and the real estate due diligence services that specialize in property. Those reports tell you what you're buying, and this checklist tells you who you're buying it from, lending to, building with and leasing to.
The seller check confirms you're dealing with the entity that owns the property and the people who can bind it.
With a sponsor or operator, the track record that matters belongs to the people running it, not the entity raising the money.
Our write-up of a $63M real estate crowdfunding fraud shows why the people come first.
A joint venture or co-development partner shares control of the project, so it gets the same screen.
Lenders screen the borrowing entity and anyone personally guaranteeing the debt.
The pre-funding checklist for private lenders and our guide to vetting a borrower's experience go further on the lending side.
When one tenant carries a large share of a building's income, its finances are part of the asset.
For contractors, the checks that matter most show whether they can finish the job and pay their suppliers.
The subcontractor prequalification checklist covers each of these in detail.
A property manager collects rent, holds deposits and signs vendor contracts on your behalf, so its record deserves the same attention as a tenant's.
Vetting runs both ways, since a contractor on a large build is effectively extending credit to the developer between payments.
Our construction and commercial real estate page covers how we work with contractors and developers on both sides of that relationship.
Many sponsors and developers form a new limited liability company (LLC) for each project, so the entity on the contract often has almost no record to search. One sponsor asked us outright whether we could find anything on an LLC formed for a single deal, and the honest answer is usually not much. The history worth knowing sits with the people who formed it, which is why we screen the principals behind the business alongside the business itself.
A general contractor we spoke with ran into this recently. The land under a large project was held by a single-asset LLC formed in 2023, and the proposed contract had dropped the parent company's guarantee. Screening the project entity confirmed it had little activity since formation, which gave the contractor solid ground to ask for the guarantee back before extending credit to an entity with no track record.
In commercial real estate due diligence, a database search is a reasonable first pass on most parties, and for many it's all you need. A few situations call for records pulled directly from the courthouse and registry, a longer lookback, or a look at the other companies the principals have run.
That's the same logic we lay out in knowing when to escalate a screen, applied to a property deal.
A completed checklist has each party screened in proportion to its role, with findings read from the source documents where they mattered and dated as of closing. Tenants, managers and contractors you keep for years can pick up a lawsuit, lien or sanctions hit after that date, so ongoing monitoring re-checks the parties you choose, monthly to annually, and alerts you when something new turns up.
If you have a deal in front of you and want help sorting out which parties need a closer look, use the Get Started button below to fill out the form, and our investigators will walk through it with you.
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