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Due Diligence Checklist of Items

  • List and describe ownership interests
  • List required third party consents and releases (i.e., mortgages, regulatory)
  • Send authorization to governmental authorities permitting access to their files
  • Review and report on government agency responses
  • Review agreements with governmental authorities affecting the Property, including correspondence and orders
  • Review and report on all encumbrances to the Property including:
    • mortgages, charges, hypothecs, security interests, liens and other monetary encumbrances
    • easements, licences and rights of way, transit, agreements
    • development agreements
    • operating and joint use agreements
    • building restrictions
    • encroachment agreements
    • assignments of rent and leases
    • capital leases
    • subsurface agreements
    • City licences
    • reciprocal agreements
  • Review all agreements relating to the co-ownership of the Property and minutes of co-ownership meetings (if any)
  • Review copies of ground leases (if any)
  • Cost sharing or other agreements with adjacent owners
  • Purchase or sale option contracts or rights of first refusal
  • Review of title and title documents
  • Review any title reports and title opinions
  • Review building code compliance and occupancy permits (Major tenants only)
  • Review of current uses and any zoning studies, reports or proposals
  • Investment Canada notification
  • Competition Act Pre-Approved
  • As built plans and specifications
  • Review of up-to-date surveys of the Property
  • Review of architectural, structural, roofing, geotechnical, parking lot/structure, electrical, life safety, mechanical as built plans and specifications by consultant and Purchaser/Asset Manager
  • Review most recent reference plan showing boundaries of the Property
  • Review of all construction contracts including all warranties
  • Building area measurement plans and tenant layout plans
  • Review any valuations and appraisals
  • Obtain & review building inspection reports by engineers, architects and other consultants
  • Obtain endorsement of all building inspection reports
  • Endorsements to purchaser of existing reports
  • Engagement of outside consultant and review any environmental audits, test results, studies or reports
  • Follow up testing and remediation
  • Copies of all certificates, approvals, licences, permits and orders issued by Environment Canada or any provincial environment ministry and details of any recent inspections by those authorities
  • Copies of all waste generator registrations, details of any wastes generated on the site, where they are disposed of, and identity of the carrier
  • Copies of licences for any pesticides or herbicides used on the property
  • Building inspection reports of friable asbestos, including pipe wrapping, ceiling tiles, sprayed on fireproofing, or acoustical plaster, or flooring
  • Building inspection reports of Urea Formaldehyde foam Insulation and/or radon
  • Records of any underground storage tanks, including inspections, upgrading, records of tanks removed and removal of any contaminated soil, any information filed with regulatory authorities and acknowledgements received
  • Details of any spills or other environment incidents reported, and of any civil proceedings for environmental damage brought or threatened against the owners or occupants of the property
  • Details of any criminal or quasi-criminal proceedings for environmental damage brought or threatened against the owners or occupants of the property or their directors
  • Details of ground water and surface water uses in the area
  • Details of wastewater discharges, sewer by-law compliance issues, and copies of sewer permits and surcharge agreements
  • Inventory of air emission and any odour release points
  • Details on the emission of air or water pollutants
  • Materials handling information (i.e., products received, inventoried, produced, generated, transported and stored)
  • Details of any PCB's in active use, and details of any PCB waste storage sites on the property, including copies of licences
  • Description of solvents and degreasers used on the property, the volumes, storage prior to use, volume of spent solvents generated, and storage, recycling and disposal practices for such spent solvents
  • Details of practices concerning the current or past storage of chemicals or fuels on the site
  • Copies of all policies, practices, procedures and systems in place dealing with the management of environmental, waste reduction and recycling, energy efficiency and related occupational health and safety, product liability and transportation of dangerous goods concerns (e.g., board of directors’ resolutions, company policies, internal personnel involved, training and education programs in place, use of external experts, on-going compliance review procedures, emergency response programs – spills/discharges, fires, accidents, investigations, etc.)
  • Completion of Property Survey
  • Evidence of Insurance - Owners, Lenders, Tenants, Third Parties
  • Complete insurer review of:
    • standard form of lease
    • Mortgage provisions
  • Check earthquake exposure and limits
  • Check Purchaser / Asset Manager's property limits
  • Review of all existing insurance policies with respect to the Buildings and chattels (including pending claims and claims paid) and inspection reports received from insurance underwriters as to the condition of the assets
  • Review insurance on all vehicles associated with the property including site truck(s), tractors and sweepers
  • Review bonding policy on employees and contracted management (if any)
  • Review all permits, consents, licences, certificates, approvals, authorizations
  • List of all litigation, actions orders, investigations, inquiries, liens commenced or threatened affecting the Property
  • Review of service, operations and maintenance contracts relating to the Building
  • Review parking management agreement (if any)
  • Review any management agreements re: ability to terminate
  • Confirm whether there has ever been a union
  • Review any collective agreement with legal counsel to signoff
  • Review a list of all outstanding complaints, applications, proceedings, investigations, orders or arbitration or other awards pursuant to any collective agreements or any labour relations, employment standards, occupational health and safety or human rights legislation
  • A list of all Workers' Compensation claims, all potential claims current assessment rates, any actual or potential penalty assessments and the status of Workers' Compensation Board accounts
  • Copies of inspection reports, testing results, records of health and safety audits, and minutes of meetings of any health and safety committee for the last 2 years
  • Copies of Employee Handbooks and statements concerning employment-related policies
  • Copies of all releases or agreements with respect to settlements of any potential or actual wrongful dismissal or similar claims arising during the past two years
  • Review of any employees on Short-Term Disability or Long-Term Disability
  • Review employment contracts
  • Review standard form of lease, offer to lease and licence agreements and provide comments
  • Copy each lease for premises in the building including any amendments thereto. Summary of each lease noting special clauses, including renewal options, termination rights, exclusivities, relocation clauses, rights of first refusal, expansion rights, recoveries
  • Compare lease summaries to Proforma
  • List of outstanding costs, tenant inducements and payables with respect to any of the leases
  • Review all current tenant correspondence files
  • Review copies of signed offers to lease and offers to lease that are in process
  • Review copies of the current rent rolls and roster
  • Draft 5-year lease expiry schedule
  • Review of accounts receivables list and explanation and historical information on any receivable in excess of $10,000.00 or 90 days
  • Review list of tenants on abatements, with related documents
  • Review list of tenant disputes, complaints, tenant defaults and breaches
  • Review list of security deposits, prepaid rents, tenant loans, guarantees and letters of credit
  • Review tenant sales information (twelve-month summary covering last 3 years)
  • Review parking licence agreements and operating permit (if any)
  • Review any agreements relating to building name, signage including signage leases
  • Review copies of all real estate broker commitments and agreements
  • Review marketing reports in respect of the Property and any marketing materials including site, stacking, lease plans
  • Review current leasing reports
  • Review current budgets (capital and operating) and supporting documentation
  • Review income statements and balance sheets for the last two years
  • Review audited reports, statements, tax billings and operating cost certificates for last two years
  • Assessment and realty tax notices for current year and immediately preceding two calendar years
  • Review assessment appeals for last 3 years
  • Review tenant reimbursements/billings
  • Review copy of the most recent promotion fund statements and tenant/merchant association matters and previous 2 years
  • If merchant's association, verify society status and last three years filings
  • Review parking operations data, contracts, and history
  • Review list and description of owned and leased chattels and other assets which are the subject of purchase, and any encumbrances in respect thereto
  • Review Tenant Improvements - Work in Progress
  • Review Capital Improvements - Work in Progress