Commercial Property Due Diligence Checklist

Step 1: Do This Before You Walk the Property

A basic desktop review before your site visit takes 15 minutes and can save you from wasting time on a property with a documented history.

• Search PA DEP eFACTS for environmental actions at the address
• Search EPA ECHO (echo.epa.gov) for federal violations or hazardous waste history
• Check Google Maps historical satellite imagery for prior uses — former gas stations, industrial operations, or dry cleaners aren't always obvious from the street today
• Call the local building department and confirm: open violations, unpermitted work, and current certificate of occupancy status
• Confirm the current use matches the zoning — ask specifically about any variances on file

Step 2: Exterior Inspection

Foundation

• Cracks wider than ¼ inch, diagonal cracks, or any crack showing displacement between sides — flag for professional evaluation
• White powder (efflorescence) on concrete or masonry = water has been moving through repeatedly
• Any visible settlement or separation between the foundation and the structure above it

Roof

• Estimate age — asphalt shingles: 20–25 years; flat membrane: 15–25 years
• Sagging roofline, failed flashing at penetrations, or evidence of ponding on flat roofs
• Gutters and downspouts: intact and directing water away from the building

Site & Drainage

• Grade should slope away from the building on all sides — water moving toward a foundation is a capital expense waiting to happen
• Oil staining on pavement can indicate vehicle maintenance on-site or historic underground storage tank activity
• Note any low-lying areas where water pools

Step 3: Interior Inspection

Walls, Ceilings & Floors

• Water staining anywhere — old or new — indicates a past intrusion; the question is whether the source was fixed or hidden
• Soft, bubbled, or discolored wall and ceiling surfaces indicate damage beneath the finish
• Floors that deflect or bounce underfoot: possible deteriorated joists or subfloor damage
• Hollow-sounding tiles: separation from substrate, often water-related
• In pre-1980 buildings, note locations of 9x9 floor tiles, ceiling tiles, and pipe insulation — these are common asbestos-suspect materials; do not disturb

Basement & Crawlspace

• Staining at consistent heights around the perimeter walls = past flooding
• Any oil or fuel staining near former heating equipment locations
• In crawlspaces: soft or discolored framing, inadequate ventilation, missing vapor barrier

Step 4: Mechanical Systems

Mechanical systems are the largest capital expense in commercial property ownership. Age and maintenance history matter more than appearance.

HVAC

• Find the manufacturer and model number — use it to confirm the unit's age
• Maintenance tag present? No tag = no documented service history
• Clogged filters, rust, corrosion, or refrigerant staining around equipment

Plumbing

• Run water at multiple points — low pressure throughout the building signals corroded supply lines or street infrastructure issues
• Ask about pipe material: galvanized steel corrodes internally and restricts flow; lead pipe is a health and lending concern
• Check water heater age on the data plate — commercial units last 10 to 15 years

Electrical

• Identify the panel manufacturer — Zinsco and Federal Pacific panels have documented safety issues and can affect insurability
• Inside the panel: double-tapped breakers, discoloration, or burning smell are immediate concerns
• Aluminum branch circuit wiring (1960s–70s construction) is a fire risk and an insurance flagging point
• Bring an outlet tester — $10, identifies reversed polarity and open grounds in seconds
• No GFCI outlets in kitchens, bathrooms, or exterior locations is a code deficiency

Step 5: Environmental Red Flags

Environmental contamination is invisible without professional assessment. What you can observe is the history and the indicators.

• Staining on soil or pavement — petroleum-type staining (dark, oily) near fill areas, loading zones, or former storage areas
• Stressed or dead vegetation in areas where growth should be healthy — subsurface contamination can affect soil above the impacted zone
• Underground storage tank indicators — look for capped fill pipes at grade, vent pipes rising from the ground, depressions where a removed tank caused soil settlement
• Floor drains in chemical, fuel, or industrial storage areas — ask where they discharge; acceptable discharge goes to a collection pit, not the ground
• Pre-1980 buildings — presume asbestos-containing materials present until confirmed otherwise through professional sampling
• Pre-1978 buildings — note deteriorating paint; lead-based paint in poor condition carries regulatory and health exposure
• Transformers on-site pre-dating 1979 — may contain PCBs regulated under federal law

Questions to Ask the Seller

A seller who cannot answer these clearly, or who will not provide documentation, is answering your question regardless.

• Has this property ever been used for manufacturing, industrial operations, dry cleaning, automotive service, or fuel storage?
• Any underground storage tanks — past or present? Removal documentation and soil testing available?
• Any environmental assessments, spill reports, or DEP correspondence on file?
• Open code violations, unpermitted work, or zoning variances?
• Roof replacement or major repair — when, and is there documentation?
• HVAC service history — last inspection date?
• Any water intrusion, flooding, or sewage backup — was it professionally remediated?
• Private well or septic on-site — when last inspected?
• Any prior Phase I ESA or Property Condition Assessment — can you provide the reports?