Due Diligence in Commercial Real Estate Transactions

 Posted on May 13, 2025 in Real Estate

Commercial real estate deals can be lucrative, but successfully navigating these often complex transactions requires careful due diligence. Otherwise, you may overlook important factors that could hurt your investment, such as zoning laws, finances that do not quite fit the bill, or unexpected property taxes. With all the factors at play in a commercial real estate transaction, and with a significant monetary investment at stake, it is crucial to examine everything thoroughly. An experienced Arlington Heights, IL commercial real estate attorney can advise you on key considerations when conducting due diligence on commercial real estate.

What Due Diligence Should You Conduct in a Commercial Real Estate Transaction?

Zoning and Land Use Compliance

Land use and zoning laws can significantly affect property value and return on investment. For example, if you purchase a commercial property to develop it into a sprawling retail space, but the zoning laws where the land is located restrict this type of usage, your investment could be put at risk. 

Financial Due Diligence

The goal of financial due diligence in commercial real estate transactions is to ensure that the purchase of the property is a sound financial decision and a good investment. Also called "underwriting" a deal, financial due diligence will involve projecting the property’s future cash flow to determine the property’s true value and investment return potential. This will include reviewing several types of documents, including lease payments, financial records, and operating statements. 

Title Search

As with any real estate transaction, it is crucial to ensure that the title to commercial property is free and clear of any other ownership interests or liens. This will strengthen not only the viability of your investment and ensure your ownership rights, but the lender will require this if you receive financing to purchase the property. 

Regulatory Due Diligence

Commercial real estate transactions must consider not only the condition of the property or land but also whether it complies with existing laws and regulations. For instance, depending on what type of property you are dealing with, it will be important to confirm whether it complies with the Americans with Disabilities Act (ADA), which mandates certain accessibility requirements. 

Call an Arlington Heights, IL Commercial Real Estate Attorney

Commercial real estate transactions have many moving parts, and conducting thorough due diligence is one factor in a successful commercial real estate purchase or sale. This is where the representation of the experienced Cook County, IL commercial real estate attorneys at Dickler, Kahn, Slowikowski & Zavell, Ltd. can make a significant difference. Call the law firm at 847-593-5595 for a confidential consultation.