Due Diligence

Due Diligence - "Due diligence" is a term used for a number of concepts involving either an investigation of a business or person prior to signing a contract, or an act with a certain standard of care. It can be a legal obligation, but the term will more commonly apply to voluntary investigations. A common example of due diligence in various industries is the process through which a potential acquirer evaluates a target company or its assets for acquisition.

Due Diligence Checklist

-Current rent roster with paid to dates

-List of security deposits

-Mortgage payment information

-Personal property list

-Floor plans

-Insurance plans, agent

-Maintenance, service agreement

-Tenant information: leases, ledger cards, applications, smoke detector forms

-List of vendors and utility companies, including account numbers

-A statement of structural alterations made to the premises if any are made

-Surveys and engineering documents

-Commission agreement

-Rental or listing agreements

-Easement agreements

-Development plans, including plans and specifications and as-built architectural, structural, mechanical, electrical and civil drawings

-Governmental permits or zoning restrictions affecting development of the property

-Management contracts

-Tax bills and property tax statements

-Utility bills

-Cash receipts and disbursements journals pertaining to the property

-Capital expenditure disbursements records pertaining to the property for the past five years

-Income and expense statements pertaining to the property for two years prior to the submission date

-Financial statements and state and federal tax returns for the property

-A termite inspection in form and content reasonably satisfactory to the buyer

-All other records and documents in the Seller's possession or under the Seller's control which would be necessary or helpful ro the ownership, operation or maintenance of the property

-Market surveys or studies of the area

-Construction budget or actuals

-Tenant profiles or surveys

-Work-order files

-Bank statements for 2 years showing operating account for property

-Certificates of occupancy

-Title abstract

-Copies of all surviving guarantees and warranties