How important is due diligence when buying commercial property?

Understanding the role of due diligence when buying commercial property is crucial for investors, developers and business owners alike. In this video, our experts suggest what can happen when issues emerge after completion and how they might be avoided.

Due diligence is one of the most important stages of any commercial property purchase. It helps buyers and lenders understand exactly what they’re acquiring and identify any legal, practical or financial risks before they commit. 

Good due diligence won’t eliminate every risk, but it can uncover issues before they become expensive problems. And if something is discovered after completion, seeking legal advice as soon as possible can help protect your position and prevent a property issue from developing into a costly dispute. 

What happens when things go wrong? 

If an owner discovers a right of way, restrictive covenant or access issue after a sale has completed, the first step is to establish exactly what information was disclosed during the transaction, what enquiries were raised and how the issue impacts the property.  

The documents and evidence are crucial in determining the options available. 

Could these problems have been avoided? 

In many cases, problems may be avoidable. Thorough due diligence, careful review of title documents, comprehensive enquiries and early investigation of anything unusual can significantly reduce the risk of problems arising after completion. 

What can buyers do if an issue emerges? 

It’s important to act quickly. Depending on the circumstances, solutions may include negotiating with the seller, obtaining indemnity insurance, seeking an injunction or pursuing a claim for damages. The best course of action will depend on the nature of the issue and the evidence available. 

If you’re a commercial property landlord or you buy or sell commercial property, register to attend our seminar ‘Real estate unlocked: Due diligence’. This session will provide practical insights into the role of due diligence in commercial property transactions, common risks that can arise, and the legal and commercial consequences when things go wrong.