Due Diligence on Real Estate: What Buyers Must Verify
When a business sale includes real estate, buyers often assume the property is “fine” because the business has operated there for years. That assumption can be costly. Real estate due diligence is its own discipline, and skipping steps can create problems long after closing.
Start With the Basics: Title and Boundaries
A title report will reveal liens, easements, covenants, and other restrictions. Buyers should review:
- Access easements
- Utility easements
- Encroachments
- Boundary line agreements
Even long‑standing issues can affect future development or financing.
Environmental Issues Can Linger
Washington’s Model Toxics Control Act imposes strict liability for contamination. For good reason, a Phase I Environmental Site Assessment is standard practice. A Phase II may be necessary if the property has ever housed:
- Auto repair,
- Manufacturing,
- Dry cleaning, or
- Fuel storage.
Zoning and Permitting
Buyers should confirm that the property’s current use is permitted under local zoning. If the buyer plans to expand, remodel, or change operations, zoning restrictions can become a roadblock.
Don’t Overlook the Building Itself
A property condition assessment can identify:
- Roof issues,
- HVAC problems,
- Structural concerns, and
- Deferred maintenance.
These findings often become negotiation points.
The Takeaway
Real estate due diligence is not a formality. It’s a safeguard. Buyers who take the time to investigate the property thoroughly are far less likely to face unpleasant surprises after closing.
The business lawyers at Beresford Booth have extensive experience dealing with business, mergers and acquisitions. Please reach out at info@beresfordlaw.com or (425) 776-4100 to see how we can help.