Due diligence is a critical step for a purchaser who proposes to acquire commercial real estate. It allows the purchaser to verify the characteristics of the property and determine whether the property meets its investment expectations. However, the due diligence process can often be challenging from a legal and practical perspective, depending on factors such as:

• The scope of the due diligence exercise.
• The amount of time for the purchaser to carry out its due diligence investigations before exchange of the transaction documents.
• Other commercial factors such as the purchaser's risk appetite and intended use for the target property.

As a result, the due diligence process generally requires careful consideration and appropriate planning between the purchaser and its legal team.

To assist the purchaser and its lawyers to carry out due diligence for standalone property acquisitions as well as broader corporate transactions (such as share or business acquisitions), Practical Law Commercial Real Estate has recently published a suite of over ten carefully curated resources in its new due diligence topic area. These resources include:

• Toolkit, Commercial property due diligence: acquisitions, which guides users through the various Practical Law resources relating to due diligence for a purchaser acquiring a freehold or leasehold interest in a standalone property transaction or as part of a broader corporate transaction.
• Practice note, Guide to legal due diligence for commercial property acquisitions (freehold), which provides guidance on the typical areas of investigation for legal due diligence for a freehold acquisition, including reviewing the title, leases, material contracts and planning and environmental issues in respect of the target property.
• Practice note, Guide to reviewing a commercial lease (tenant focus), which provides guidance on the key matters to consider when reviewing a commercial lease for an existing or incoming tenant. A separate landlord-focused guide is also available.
• Checklist, Lease due diligence: freehold or leasehold acquisitions, which covers the matters to consider when preparing for lease due diligence on behalf of a party acquiring an interest in the lease either as the incoming tenant (as assignee of the lease) or incoming landlord (acquiring the property from the existing landlord). This includes an overview of the documents typically required for a lease due diligence exercise, scoping the lease review and the common commercial and legal issues relevant to each party.
• Standard document, Commercial lease review template (long form), for use when reviewing commercial leases as part of due diligence for either an incoming landlord or incoming tenant. A short form template is also available.

Below is a short video that provides a guided tour of Practical Law Commercial Real Estate's new due diligence topic area.

Subscribers can access the full suite of property due diligence resources from Practical Law's Commercial Real Estate practice area resource page. For more information, or to discuss a subscription to Practical Law Commercial Real Estate, please contact your account manager or Christine Gray, Head of Commercial Real Estate.