DUE DILIGENCE CHECKLIST - Posted by Ken Anderson
Posted by Ken Anderson on October 11, 2003 at 09:22:59:
Are you comfortable with the due diligence checklist you posted in your article? (I have left out Y2K compliance stuff).
I would love an updated comprehensive checklist! hank0-you very much for your attention.
Preliminary due diligence checklist:
· Financial records:
· Annual profit and loss statements (P&Ls) past 3 years minimum (5 years preferred)
· At least one year monthly P&Ls (preferably two years)
· Balance sheet (3 years)
· Rent Roll including term, deposit, and payment history
· Tax returns- 3 years
· Insurance: Insurance Policy; including all riders, risk assessments, and disclosure affidavit for carrier
· All Existing Loan Documents: including notes, deeds of trust, closing statements, title policy, rate riders, etc., and contact names and numbers.
· All Leases: entire copies plus any addendum or riders.
· Any service or advertising contracts: (Trash, extermination, maintenance, management, commission agreements, union agreements, vending, billboard, pay telephone, etc. and any instrument or contract to be assumed by Purchaser)
· Copies of all recent appraisals, engineering reports, environmental reports
· Survey (as-built), legal description, architectural and engineering plans and specifications
· Payroll register: List of employees including name, position, wage rate, and entitled benefits
· Business license
· Physical inventory of furniture, fixtures, and equipment, and supplies.
· Utility bills: Water, Sewer, Gas, Electric (at least two years of monthly statements) (or recap report from provider showing usage and cost)
· Bank statements showing deposits for last twelve months (optional)
· Phone system documents
· Computer systems
· Fire System inspection reports
· Property Tax tickets for the past three years (real estate and personal)
· Litigation History: details of any past or pending litigation (if none, then affidavit from owner)
Comprehensive due diligence: pre-closing
· Engineering Inspection and Survey
· Environmental Inspection and Survey: Key Issues: Asbestos, Lead Paint, underground tanks, wetlands
· Environmental Phase One: An Environmental Phase One (1) Assessment is an inquiry conducted to determine the environmental status of a property or facility in connection with a real estate property transaction. It follows standards which includes those published by ASTM.
· Environmental Phase Two: Assessments/Subsurface Investigations: These projects include but are not limited to subsurface drilling and sampling, monitoring well installation and sampling, ground penetrating radar, and asbestos and lead sampling.
· LUST survey- leaking underground storage tanks
· Financial Audit
· Title Search and policy
· Property tax verification
· Tenant Estoppel Letters
· Mortgagee Estoppel letters
· Legal Verifications: licenses, permits, zoning