Michigan Commercial Real Estate Guide
Commercial Property Due Diligence Checklist in Michigan
Use this checklist to organize the questions, documents, inspections and professional reviews that can help a buyer, tenant or investor understand a commercial property before a contingency period, closing or lease commitment expires.
What Due Diligence Is For
The Goal Is to Understand What You Are Actually Committing To
Commercial real estate due diligence is the process of verifying the facts that matter to the transaction. It can include legal rights, zoning, building condition, environmental risk, operating expenses, leases, utilities, access, financing and other property-specific issues.
The right scope depends on the property and the deal. An owner-user buying a warehouse may focus heavily on power, loading, roof condition and zoning. An investor acquiring a multi-tenant property may spend more time on leases, rent rolls, tenant obligations, operating history and capital expenditures. A development site can require deeper review of utilities, wetlands, access, soils, entitlement and engineering. For a broader planning overview, see our guide to commercial land development in Michigan.
This page is an organizational tool, not legal, environmental, engineering, accounting or tax advice. Use qualified professionals for the parts of the investigation that require specialized judgment.
Start the investigations that can create the biggest schedule risk first. Environmental testing, surveys, municipal approvals, financing, estoppels, engineering and specialty inspections can take longer than expected.
Suggested Workflow
What to Review Before Your Contingency Period Expires
Not every deal follows the same timeline, but this sequence helps keep major issues from being discovered at the end.
Confirm the Deal Basics
Get the purchase agreement or lease, legal description, property disclosures, existing surveys, title information, financials and available property records organized immediately.
Launch Third-Party Work
Order the Phase I ESA, property condition review, survey, appraisal and other inspections that apply to the property and financing structure.
Resolve Property Fit
Verify zoning, use, utilities, access, parking, loading, planned improvements, lease economics and major capital issues while there is still time to respond.
Make the Go / No-Go Decision
Review unresolved issues with the appropriate professionals and address extensions, credits, repairs, conditions, approvals or termination rights before deadlines pass.
1. Title, Survey & Legal
Confirm What Is Being Conveyed — and What Rights Affect It
Legal and title review can uncover restrictions or rights that materially affect access, development, financing or use.
Title & Ownership
Have the appropriate professionals review ownership, liens and recorded exceptions.
- Title commitment / preliminary title report
- Legal description and parcel identification
- Mortgages, liens and judgments affecting title
- Recorded easements and access rights
- Declarations, covenants and use restrictions
- Rights of first refusal or purchase options, if applicable
Survey & Site Rights
A current survey may reveal physical or legal conditions not obvious from a listing or aerial.
- Property boundaries and acreage
- Buildings, setbacks and encroachments
- Driveways, access points and shared drives
- Utility and drainage easements
- Parking and loading areas
- Rights-of-way and adjoining improvements
A property can front a major road without having unrestricted access to it. Verify recorded access rights, driveway approvals, shared-access agreements and any private-road obligations that matter to the intended operation.
2. Zoning & Permitted Use
Make Sure the Property Can Legally Support the Intended Use
Do not rely only on a zoning code shown in a flyer or database. Confirm what the local ordinance actually allows.
For a deeper explanation of permitted uses, special land uses, variances and future land use, review Commercial Zoning in Michigan.
3. Physical Property Review
Inspect the Building and Site Around the Way You Plan to Use Them
Physical due diligence should look beyond visible cosmetics and focus on remaining life, deferred maintenance, code concerns and operational fit.
Building Envelope & Structure
- Roof age, condition, drainage and warranty
- Exterior walls, masonry, panels and windows
- Foundation and visible structural conditions
- Water intrusion or recurring moisture issues
- Canopies, awnings and exterior attachments
Mechanical, Electrical & Plumbing
- HVAC age, capacity and service history
- Electrical service, voltage, phase and amperage
- Panels, transformers and distribution
- Plumbing, water service and sanitary system
- Fire protection and sprinkler systems
Site & Exterior
- Pavement, curbs, drainage and catch basins
- Parking count and striping
- Exterior lighting and security
- Retaining walls, fencing and landscaping
- Snow-storage and maintenance areas
Operational Fit
- Clear height and column spacing
- Dock-high and grade-level loading
- Truck court and turning radius
- Office-to-warehouse ratio
- Crane systems, compressed air or specialty infrastructure
- Expansion potential and future layout flexibility
A building can operate today and still have a roof, HVAC system, parking lot or other major component approaching the end of its useful life. Ask the inspector or engineer to help identify near-term capital items, not only current defects.
4. Environmental Due Diligence
Understand the Property’s Environmental History and Potential Liability
Commercial and industrial properties can require specialized environmental review, particularly when past uses involved fuels, solvents, manufacturing, dry cleaning, automotive activity, fill or other potential sources of contamination.
Phase I Environmental Site Assessment
A Phase I ESA is commonly used to investigate past and current property uses and identify recognized environmental conditions that may warrant further investigation.
- Historical property use review
- Regulatory database review
- Site reconnaissance
- Interviews and records review
- Evaluation by an environmental professional
Potential Follow-Up Work
Depending on the Phase I findings and property history, the environmental team may recommend additional investigation or specialized review.
- Phase II sampling and testing
- Underground or aboveground storage tanks
- Vapor intrusion evaluation
- Asbestos / hazardous materials surveys
- Michigan Baseline Environmental Assessment questions
- Due care obligations and use restrictions
EPA recognizes ASTM E1527-21 Phase I Environmental Site Assessments as consistent with the federal All Appropriate Inquiries rule. Buyers seeking federal CERCLA liability protections should work with qualified environmental and legal professionals to ensure all applicable requirements are met.
When contamination is known or suspected, involve a Michigan environmental professional and legal counsel early. EGLE resources address Baseline Environmental Assessments, due care, vapor intrusion, restrictive covenants and brownfield assessment assistance.
5. Financial, Lease & Operating Review
Verify the Economics Behind the Property
The right review differs for an owner-user and an investment property, but the goal is the same: understand recurring costs, contractual obligations and future financial exposure.
| Area | Items to Review | Why It Matters |
|---|---|---|
| Property Taxes | Current tax bills, assessed/taxable value, special assessments and recent changes. | Taxes can materially affect ownership cost or reimbursable operating expenses. |
| Utilities | Electric, gas, water, sewer and other utility bills; service capacity and demand. | Historical usage helps estimate operating cost and whether service fits the intended operation. |
| Insurance | Current coverage, claims history when available, insurability and preliminary quotes. | Property type, condition, occupancy and risk characteristics can affect cost and availability. |
| Service Contracts | HVAC, elevator, landscaping, snow, security, waste, fire systems and other recurring contracts. | Confirm which contracts continue, terminate or need replacement after closing. |
| Capital History | Roof, HVAC, paving, lighting, windows, façade and major building upgrades. | Helps understand remaining life and near-term capital needs. |
| Tenant Leases | Executed leases, amendments, options, rent schedule, deposits, reimbursements and tenant obligations. | Investment value depends on the actual lease documents, not only a marketing rent roll. |
| Tenant Verification | Estoppels, delinquency, concessions, disputes and landlord obligations where applicable. | Helps confirm the income stream and outstanding commitments before acquisition. |
6. Financing, Approvals & Closing
Make Sure the Transaction Can Actually Reach the Finish Line
Due diligence is not complete until the business plan, financing and closing conditions line up with the property findings.
Financing & Valuation
- Lender requirements and loan approval
- Appraisal and valuation assumptions
- Required reserves or repairs
- Insurance approval
- Entity and guaranty requirements
- Timing for loan documents and closing conditions
Closing Readiness
- Final title and survey issues resolved
- Required municipal or third-party approvals addressed
- Credits, repairs and seller obligations documented
- Tenant estoppels / SNDAs when applicable
- Utility and service transitions planned
- Possession, keys, access control and security coordinated
Know the exact contingency, financing, inspection, approval and closing deadlines in the contract or lease. If an issue remains unresolved, discuss available options with your attorney and transaction team before the deadline expires.
Master Checklist
Commercial Property Due Diligence Checklist
Use this as a working list and add property-specific items based on the building, business, municipality and transaction structure.
Official Environmental Resources
Useful Michigan and Federal References
Environmental due diligence can carry legal and technical consequences. Use current agency guidance and qualified professionals for property-specific decisions.
Due Diligence FAQs
Common Commercial Property Due Diligence Questions
How long should commercial property due diligence take?
There is no universal period. The appropriate timeline depends on the property, contract, financing, required inspections, survey, environmental work, tenant documentation and any municipal approvals. Build the schedule around the actual work required rather than assuming every deal fits the same number of days.
Do I need a Phase I Environmental Site Assessment for every commercial property?
Not every transaction is identical, but environmental review is especially important for commercial and industrial property acquisitions. Buyers should discuss the appropriate scope with qualified environmental and legal professionals, particularly if they intend to rely on federal liability protections or the site has potentially contaminating past uses.
Is a property inspection the same as an environmental assessment?
No. A property condition inspection typically focuses on the physical building and site, while environmental due diligence evaluates environmental conditions and historical uses. Both may be important to the same transaction.
Should a tenant perform due diligence too?
Yes. A tenant may need to verify zoning, permitted use, parking, utilities, building systems, accessibility, construction feasibility, operating expenses and landlord obligations before committing to a long-term lease.
What is the biggest due diligence mistake?
Relying on marketing information without independently verifying the items that are critical to the business or investment. Property facts, zoning, expenses, environmental conditions, leases and physical systems should be reviewed at a level appropriate to the transaction.
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Related Michigan Commercial Real Estate Resources
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