Commercial real estate due diligence checklist
A practical due diligence checklist for commercial real estate acquisition teams. Financial, physical, legal, environmental, and financing workstreams.
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Used by commercial real estate investment and development teams to manage deals from sourcing to close.
Why most CRE due diligence checklists fail
Due diligence is the part of the deal where everything either gets verified or surfaces as a problem. It is also the phase where deal teams are most exposed to the risk of missed items. A missed environmental issue can kill a deal three days before closing. A missed tenant estoppel can drop the underwriting value by a million dollars. A missed title exception can delay closing by weeks. And the common thread across every deal that has been killed by a missed item is that the team had a checklist. The checklist just was not the tool that caught it.
The reason most due diligence checklists fail is that they are documents, not systems. A Word doc or Google Sheet with 80 line items is a list. It sits in a folder. The team refers to it once at the start of DD, a few times during, and once at the end. The items on it do not have owners, deadlines, or state. There is no mechanism to surface the items that are stuck. By the time the partner asks 'how is DD going on the Plano deal,' the answer is whatever the lead analyst remembers, not what the checklist actually shows.
The second failure mode is that checklists do not update as the deal's situation changes. A multifamily checklist is different from an industrial checklist, and a value-add deal has different items than a core acquisition. Most teams use one master checklist and manually prune it for each deal, which means the pruning itself is error-prone and a source of missed items. The analyst forgets to remove the items that do not apply, and the team wastes time chasing irrelevant ones. Or they forget to add the items that are unique to this deal, and something gets missed.
The third failure mode is that checklists do not surface ownership. A line item like 'Phase I environmental' does not tell you who is responsible for ordering it, who the environmental consultant is, when the report is due, or whether it has come back clean. The team treats the checklist as a reference document and tracks the actual work somewhere else, which means the checklist is always slightly out of date relative to reality.
The fourth failure mode is that checklists cannot hold the underlying documents. A line item like 'rent roll received' should be linked to the actual rent roll file, versioned and timestamped. When it is in a separate spreadsheet, the team has to context-switch to verify whether the item is really done. Friction adds up, and by the end of DD the team is skipping the checklist in favor of the Google Drive folder.
Pipeline
A CRE pipeline, done right
Every deal has a workspace, every workstream has an owner, and the pipeline is a live view into the team's actual work.
What a working CRE due diligence checklist covers
A working CRE due diligence checklist is a set of tasks with owners, deadlines, states, and linked documents. The categories below are the durable core for most acquisition deals. Adapt and extend them for your asset class and deal structure.
Financial due diligence
Trailing 12-month operating statements, three years of historical financials, current rent roll with unit-by-unit detail, historical occupancy trends, trailing expense analysis, tax returns (if available), property tax bills, utility bills, CAM reconciliations (for retail), tenant credit reports (for office and retail), and bank statements supporting deposit trail. Every one of these is a task with an owner, a deadline, and a linked document when received.
Physical due diligence
Property condition report, mechanical systems inspection, roof inspection, structural inspection (if warranted), unit walk inspection (for multifamily), ADA compliance review, parking and site review, and any asset-specific inspections. Owners are typically the associate coordinating inspections and the outside inspectors themselves.
Legal due diligence
Title commitment, title exceptions review, survey, ALTA survey (if required by lender), zoning verification, entitlement review, existing leases review, tenant estoppel certificates, service contract review, and any material litigation review. Legal workstreams usually involve outside counsel.
Environmental due diligence
Phase I environmental site assessment, Phase II (if Phase I recommends), wetlands delineation (if applicable), asbestos and lead paint screening (for older buildings), and any asset-specific environmental reviews. Environmental timelines are often the longest workstream in DD, so start them early.
Financing due diligence
Lender quote comparison, term sheet negotiation, rate lock strategy, appraisal coordination, lender-side environmental and title orders, and commitment letter review. Financing runs parallel to the other workstreams and has its own deadlines.
Insurance and risk
Existing policy review, replacement cost analysis, flood zone determination, hurricane and wind exposure (for coastal properties), and quote from the buyer's broker for post-close insurance.
How MotionCRE handles the due diligence checklist
In MotionCRE, the due diligence checklist is a set of tasks attached to the deal workspace, not a document stored in a folder. Each task has an owner, a deadline, a status, and a place to attach the document that satisfies the requirement. When the Phase I environmental comes back, the team uploads it to the task and the task moves to complete, which flows through to the deal card and the pipeline view.
Tasks are grouped by workstream (financial, physical, legal, environmental, financing, insurance) so the team can see at a glance which workstreams are progressing and which are stuck. A partner asking about the status of DD on a deal gets an immediate answer from the deal card, without a hallway conversation.
Because tasks are scoped to the deal, the checklist stays tied to its context. A new analyst picking up a deal in DD sees exactly what has been done, what is outstanding, and what documents support each completed item.
Common questions
It should cover six categories: financial DD, physical DD, legal DD, environmental DD, financing DD, and insurance. Each item should be a task with an owner, a deadline, a status, and a linked document. A list of items without those fields is a reference document, not a working checklist.
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