1 PRELIMINARY DUE DILIGENCE

1.1 Financial Records

1.1.1 Annual profit and loss statements (P&Ls) past 3 years

minimum (5 years preferred)
1.1.2 At least one year monthly P&Ls (preferably 2 years)
1.1.3 Balance sheet (3 years)

1.1.4 Rent roll including term, deposit, and payment history

1.1.5 Financial cash flow projections

1.1.6 Capital expenditures schedule
1.2 Tax Returns
1.2.1 3 year history
1.3 Insurance

1.3.1 Insurance Policy; including all riders, risk assessments, and

disclosure affidavit for carrier
1.4 Existing Loan Documents
1.4.1 Notes
1.4.2 Deeds of trust
1.4.1 Closing statements
1.4.1 Title policy
1.4.1 Rate riders
1.4.1 Contact names and numbers
1.5 Deed
1.6 Leases
1.6.1 Entire copies of leases
1.6.2 Any addendum of Riders
1.7 Service or Advertising Contracts
1.7.1 Trash or garbage service
1.7.2 Extermination
1.7.3 Maintenance
1.7.4 Management
1.7.5 Commission Agreements
1.7.6 Union Agreements
 1.7.7 Vending
1.7.8 Billboards
1.7.9 Pay telephone

1.7.10 Any instrument or contract to be assumed by the

purchaser
1.8 Recent Appraisals
1.9 Engineering Reports
1.1 Environmental Reports
1.11 Survey (as built)
1.12 Legal Description

1.13 Architectural and Engineering Plans with Specifications

1.14 Payroll Register

1.14.1 List of employees including name, position, wage rate and

entitled benefits
1.15 Business Licence
1.16 Physical Inventory
1.16.1 Furniture
1.16.2 Fixtures
1.16.3 Equipment
1.16.4 Supplies
1.17 Utility Bills
1.17.1 Water
1.17.2 Sewer
1.17.3 Gas
Electric with at least two years worth of monthly
1.17.4 statements or a recap report from provider showing usage
and cost
1.18 Bank Statements

1.18.1 Bank statements showing deposits from the last 12

months
1.19 Phone System Documents
1.2 List of Computer Systems
1.21 Fire System Inspection Reports
1.22 Property Tax Tickets
1.22.1 Tax tickets for the past three years (real estate and
personal)
1.23 Litigation History

1.23.1 Details of any past or pending litigation (if none, then

affidavit from owner)
2 PRE-CLOSING
2.1 Engineering Inspection and Survey
2.2 Environmental Inspection and Survey
2.2.1 Asbestos
2.2.2 Lead paint
2.2.3 Underground tanks
2.2.4 Wetlands
2.3 Environmental Phase One:

Assessment is an inquiry conducted to determine the

environmental status of a property or facility in connection
2.3.1 with a real estate property transaction. It follows
standards which includes those published by ASTM.

2.4 Environmental Phase Two:

These projects include but are not limited to subsurface
2.4.1 drilling and sampling, monitoring well installation and
sampling, ground penetrating radar, and asbestos and lead
sampling.
2.5 LUST Survey
2.5.1 Leaking underground storage tanks
2.6 Financial Audit
2.7 Title Search and Policy
2.8 Property Tax Verification
2.9 Tenant Estoppel Letters
2.1 Mortgage Estoppel Letters
2.11 Legal Verifications
2.11.1 Licences
2.11.2 Permits
2.11.3 Zoning
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