A properly developed due diligence program can yield significant cost savings to buyers in terms of liabilities avoided and
cost adjustments to a particular transaction if information from the due diligence investigation is used properly
and in the early stage of the transactional process.

DUE DILIGENCE FOR LEASED PROPERTY AND
INDUSTRIAL AND COMMERCIAL CONDOMINIUM PROPERTY

For long term leases it is prudent to document existing conditions at the start of the lease term to establish baseline condition and avoid landlord-tenant disputes at the end of the lease.  Landlord claims of insufficient maintenance or care resulting in property damage can be refuted by a well documented report of existing conditions.

ENVIRONMENTAL LIABILITIES ASSOCIATED WITH LEASED PROPERTIES

The question of liabilities associated with leased properties comes up frequently. The question usually takes two forms:

1. What are my liabilities associated with site contamination during and after the lease period?
2. Who is responsible for permits while I operate on a leased property?

CONTAMINATION LIABILITIES

The liabilities associated with environmental releases and site contamination are not significantly different if properties are leased rather than purchased. If a site is found to be contaminated, you may be considered a Responsible Party. This is true even if contamination is caused by future owners or occupants; especially if you can not document the property condition at the time you vacated the property.

COMPLIANCE LIABILITIES

The issue of environmental compliance tends to be less straight forward, and can be effected by specific terms agreed to in a lease. However, in the absence of other information, it is best to assume that all permits associated with your processes are your responsibility.  The compliance obligations for equipment or processes that are maintained by the property owner, or shared services with other occupants often become less clear and need to be defined. One example might be an emergency generator used to supply power to several tenants in a building.

The purpose of Phase I Environmental Assessment  is to gather sufficient information to develop an independent professional opinion about the environmental condition of the property and to identify actual or potential environmental contamination which may impact the property value or adversely affect a claim to an innocent landowner defense or other environmental liability protection following acquisition or tenancy.  In certain cases you may qualify for a less stringent form of environmental assessment at a reduced cost.  Contact us for details.  

Environmental Inspection & Assessment Services designs and performs comprehensive Environmental Site Assessment (ESA) in accordance with the ASTM International (ASTM) Standard for Environmental Site Assessments: Phase I Environmental Site Assessment Process, for real estate lease and purchase/sale transactions; mergers and acquisitions; property development and redevelopment; financing, re-financing, and foreclosure.    Read more about Diligence Phase I Assessment  

CONTACT US

To order environmental assessment or for more information contact:
Edward Devine, Environmental Professional and Senior Inspector
directly by telephone at  (585) 738-5080.

You may also Request a quote by e-mail and we'll reply promptly. 

PROPERTY CONDITION ASSESSMENT

If you are leasing space in a commercial or industrial building your due diligence routine should include Due Diligence Phase I Assessment and a Property Condition Assessment (PCA) or comprehensive Commercial Building & Property Inspection or Industrial Building & Property Inspection.  

A complete Due Diligence routine includes Environmental Assessment and Property Condition Assessment.  As a lessee you may not be responsible for repair, replacement or maintenance of most building systems but you are probably responsible for some and nearly all can affect your business..  

Even if you’re not responsible for roofing, roofs can leak resulting in damage to your equipment or inventory and unsafe or unhealthy working conditions.  Computers, musical equipment, furniture, paper products and files, inventory and supplies can all be irreparably damaged from water from a leaky roof and water entry can foster the growth of mold in open spaces and also within floor, wall and ceiling cavities.

You may not be responsible for heating and air conditioning equipment but undependable systems can  have a negative impact on productivity and in extreme cases could require your business to shut down until repair or replacement is made. 

It is unlikely that you’re responsible for the regular testing and maintenance of fire suppression and other life safety systems but lacking the effective protection of these systems could easily result in total loss of everything in your space as well as serious injury or even death.  

The rationale for an overall building inspection is to be aware of the condition and care of equipment located in your space and also in other areas of the building including the basement (if any), mechanical rooms and on the roof.  This information could affect your decision to lease the property or alter or clarify lease terms and conditions. 
Read more about Property Condition Assessment

QUALIFICATIONS

Lifespace Corporation has 24 years building, property and environmental inspection and assessment experience on all types of real estate: commercial and industrial buildings including apartment, condominium and other residential property and office, call center, warehouse, distribution, manufacturing, hotel and motel, restaurant and club, bank, retail, mall, plaza call center, gas station and automotive service plus land including vacant land, agriculture land and forestry land.

DISCOUNTS

Property Condition Assessment as well as Commercial Building & Property Inspection or Industrial Building & Property Inspection are discounted when ordered together with Phase I Environmental Assessment including Vapor Intrusion Assessment in a complete Due Diligence Inspection & Assessment Service Package.

CONFIDENTIALITY

Due Diligence Reports are designed to provide you and your attorney with information that can be used to structure your lease agreement.  Your report is confidential to you.  Due Diligence Inspection and Assessment Services is not required and does not file reports with any regulatory agency and will not release any information to anyone except as directed by you.  

CONTACT US

To order property condition assessment or a complete due diligence inspection and assessment package or for more information contact Edward Devine, Environmental Professional and Senior Inspector
directly by telephone at  (585) 738-5080.

You may also Request a quote by e-mail and we'll reply promptly. 

COMMON LEASE TERMINOLOGY
Common Lease Terms

Build-to-suit: a method of leasing property in which the landlord makes improvements to a space based on the tenant's specifications. The cost of construction is generally factored into the lease terms. Most build-to-suit provisions apply to long-term (10-year) leases.

Concessions: benefits or discounts given by the seller or landlord of a property to help close a sale or lease. Common concessions include absorption of moving expenses, space remodeling, or upgrades (also called "build-outs"), and reduced rent for the initial term of the lease. 

Escalation clause: a clause in a lease that allows the landlord to increase rent in the future. Rent increases dictated under an escalation clause may be charged in various ways, including: 

• A fixed increase over a definite period A cost-of-living increase tied to a government index, such as the tax rate 
• An increase directly related to increases in operating the property

Lease: an agreement by which the owner of a property (the "lessor") grants the right of possession to a tenant (the "lessee") for a specific period of time (the "term") for a predetermined amount of money (the "rent"). A "leasehold estate" is the space occupied by the tenant. Common types of leases include: 

• A straight, or flat, lease, which stipulates that the same periodic payment (usually monthly) be made for the entire term of the lease. 
• A percentage lease, which uses a percentage of the net or gross sales to determine the monthly rent.  This is most often used in retail properties and with a minimum base rent. 
• A net lease, which requires the tenant to pay maintenance, taxes, insurance and so on, along with a fixed rent. This is also called "net-net-net" or "triple net." 

Sale-leaseback: a transaction in which an owner sells a property to an investor, who then leases the property back to the original owner under prearranged terms.  Sale-leaseback deals offer the original owner freed-up capital and tax breaks and the investor a guaranteed return and appreciation. 

Sublease: a lease given by a tenant for some or all of a rented property.  For example, if a tenant rents 20,000 square feet but only ends up needing 10,000 square feet, they may want to sublet the extra space for some or all of the remaining term of the lease, providing they continue to occupy and pay rent for the property.  

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