REAL ESTATE DUE DILIGENCE. L e g e n d NAME

Transcription

1 REAL ESTATE DUE DILIGENCE AND CLOSING CHECKLIST INITIALS - L e g e n d NAME COMPANY Property: Client: Purchase Price: Initial Earnest Money Deposit: Form of Deposit (LC or Cash): Additional Deposit: Contract Date: Initial Earnest Money Deposit Date: Additional Earnest Money Deposit Date: If LC, Expiry Date: Due Diligence Completion Date: Closing Date: Acquisition s / Documents 1. Signed Letter of Intent 2. Investment Committee Presentation and Approval 3. Request/obtain Due Diligence Materials 4. Select Legal Counsel 5. Select UBIT/ERISA Counsel 6. Obtain/review 1 st draft of Purchase Contract 7. Obtain/review 2 nd draft of Purchase Contract 8. Obtain/review 3 rd draft of Purchase Contract 9. Obtain/review 4 th draft of Purchase Contract 10. Obtain/review 5 th draft of Purchase Contract 11. Obtain Access Agreement 12. Client Authorization Letter 13. Portfolio Manager Authorization Letter 14. Obtain/review fully executed purchase contract 15. Deliver copy of fully executed Contract into escrow 16. Arrange for Buyer's initial LC or cash deposit with Escrow Holder 17. Arrange for investment of Buyer's initial cash deposit 18. Independent Contract Consideration to Seller 19. Prepare funding schedule and forward to portfolio manager/client 20. Obtain name of acquiring (title holding) entity 21. Arrange for required bank accounts to be set up 22. Obtain fully executed 1 st Amendment to Purchase Contract 23. Obtain fully executed 2 nd Amendment to Purchase Contract Title/Survey/Zoning Matters 1. Select Title Company 2. Receive/review Seller s title commitment and underlying documents; forward to Title Company 3. Order current title commitment and underlying documents 4. UCC and judgment lien searches 5. Receive and review existing survey 6. Order new ALTA survey (or update) 7. Subdivision and parcel maps 8. Restrictive covenants, easements, and agreements Page 1

2 Title/Survey/Zoning Matters 9. Local improvement district information 10. Verify Leases, Entitlements, and other assets are in Seller s name or that appropriate Assignment documents exist 11. Confirm releases available from current lienholders (if applicable) 12. Deliver Title and Survey Objection Letter to Seller (if applicable) Tenant/Lease Matters 1. Obtain current Certified Rent Roll 2. Receive/review Leases, Amendments and all related documents; prepare Lease Summaries 3. Engage Legal Counsel to review Leases and prepare Lease Summaries 4. Compare Internal Lease Summaries to Legal Counsel s Lease Summaries 5. Compare Lease Summaries with Rent Roll and Pro Forma 6. Review Tenant Lease Files 7. Resolve issues regarding Leases 8. Review Tenant Correspondence Files 9. Compare expense pass-throughs/cam charges to Operating Statements 10. Review cost pools for overcharges to tenants 11. Receive/review tenant sales reports 12. Receive/review list of security deposits 13. Receive/review aged receivables report 14. Review tenant credit information, payment history 15. Review Leases for any contractual Landlord obligations (i.e. construction, payments to tenant) 16. Compare square footage between Leases and Rent Roll 17. Prepare Tenant Estoppel Certificates 18. Review signed Tenant Estoppel Certificates 19. Cross-check signed estoppels against the rent/deposit schedule Financial Matters 1. Receive and review copies of historical and proforma financial information 2. Receive and review utility bills (electric, water, gas) 3. Receive and review most recent tax statements and related information 4. Verify all expenses of operating the property have been reflected in the financial information provided by the Seller 5. Compare expenses to comparable building data 6. Receive/review past and budgeted capital improvements Page 2

3 Service Contracts 1. Receive and review service contracts 2. Verify all service contracts terminable without penalty 3. Confirm assignability of service contracts 4. Approve contracts to be transferred & notify Seller Litigation 1. Review litigation list (if applicable) 2. Determine existence of contingent liabilities or open claims against the property Insurance 1. Obtain insurance quote from Risk Management 2. Review third party Property Management Agreement for adequacy of insurance coverage 3. Provide information to Risk Management for final Certificate of Insurance Personal Property Inventory 1. Receive and review list of personal property 2. Verify no material personal property omitted from personal property list 3. Verify personal property in good operating condition Physical Property Inspection and Review 1. Receive/review as-built plans/specs (electrical, mechanical, structural) 2. Receive/review existing inspection reports (roofing, HVAC, seismic, soils) 3. Order current engineering report (Property Condition Assessment), to include structural, mechanical, code compliance and ADA compliance. 4. Receive/review existing environmental reports and studies 5. Order current Phase I Environmental Site Assessment 6. Order current Additional Site Investigation (Phase II) 6. Receive/review building permits, licenses, certificates of occupancy 7. Verify parking is adequate (i.e. governmental regulations, practical requirements, lease requirements) 8. Verify approximate sf of improvements 9. Review utility site plan, verify adequate utility hook-ups, verify all utility hook-up fees paid, identify requirements for utility deposits 10. Review energy usage reports; compare usage to expenses Page 3

4 Physical Property Inspection and Review 11. Verify amount of available wattage psf and compare to market 12. Receive & review construction contracts/subcontracts 13. Receive & review building warranties/guarantees 14. List of personal property and trade/service names 15. Copies of liability, casualty and other insurance 16. Site plans, leasing brochures, maps and photographs Governmental Review 1. Review licenses and permits; verify no breach of licenses and permits, that all conditions are satisfied, that licenses and permits are in current Owner s name and whether transfer is required, and that there are pending applications for licenses and permits 2. Verify certificates of occupancy for property and tenant spaces on file 3. Verify proper zoning; obtain zoning letter 4. Verify improvements comply with governmental regulations 5. Verify no development rights transferred 6. Verify no existing contemplated assessments 7. Verify no pending rezoning 8. Verify no pending administrative proceedings or governmental plans or studies 9. Verify no utility moratorium Property Operations and Management 1. Select Property Management company 2. Finalize Property Management Agreement 3. Verify financial terms of Property Management Agreement are reflected in proforma 4. Select leasing company 4. Verify Service Contracts are at market 5. Verify no disputes with brokers, suppliers or employees 6. Verify no existing or contemplated labor strikes 7. Verify all obligations and trade creditors being paid in normal course 8. Review Property management files 9. Review list of warranties and expiration dates 10. Review maintenance schedules for equipment, and repairs and maintenance expenses Financing Matters (If applicable) 1. Contact Mortgage Consultant 2. Provide Property information to Mortgage Consultant 3. Receive/review Loan Quotes 4. Select Lender 5. Signed Loan Commitment 6. Arrange Payment of Loan Commitment Fees Page 4

5 Financing Matters (If applicable) 7. Receive/review/negotiate Loan Application 8. Signed Loan Application 9. Provide Mortgage Consultant/Lender with requested documents 10. Finalize Loan Documents 11. Signed Loan Documents 12. Arrange for funding of Financing Proceeds Closing and Miscellaneous s 1. Notify Seller of any breach or misrepresentation discovered during due diligence review 2. Aggregate cost of correcting any problems discovered through due diligence 3. Initiate any necessary changes to forms of Closing Documents 4. Prepare and approve authority documents 5. Request current financial information from Seller for prorations 6. Confirm prorations for taxes and assessments 7. Confirm prorations for utilities 8. Confirm prorations for rents 9. Confirm prorations for permit and license fees 10. Confirm prorations for utility deposits 11. Confirm prorations for operating accounts 12. Confirm prorations for obligations under contracts 13. Confirm prorations for security deposits 14. Confirm prorations for closing costs 15. Confirm prorations for any commissions, tenant improvements, or other leasing expenses 16. Confirm prorations for any other apportionments 17. Request schedule of Buyer's title related costs from title company 18. Prepare schedule of estimated closing costs 19. Prepare & distribute form of Tenant Notice 20. Prepare the assignment of Purchase Contract 21. Arrange for Buyer's replacement/additional cash deposit 22. Arrange for investment of Buyer's replacement/additional cash deposit 23. Confirm return receipt of initial LC and return it to bank; or 24. Confirm return receipt of initial/additional cash deposit; or 25. Instruct bank to transfer returned cash deposit to line of credit 26. Prepare schedule of Buyer's funding into escrow 27. Arrange for Buyer's purchase proceeds to be funded into escrow 28. Arrange for Buyer's purchase proceeds to be invested overnight 29. Review escrow instructions and exhibits to closing documents 30. Coordinate delivery of original documents to property manager 31. Obtain/review the closing statement 32. Confirm recording/disbursement of funds 33. Confirm property/liability insurance in place 34. Send letter to client confirming closing (with closing statement/funding schedules) 35. Instruct counsel to distribute the closing binders Page 5

6 Internal Procedures and Reporting 1. Confirm property visit by Asset Management and Management Committee member 2. Confirm that all client specific acquisition requirements are met 3. Issue transition memo to Asset Management, Property Management and Accounting (if applicable) Page 6