A commercial real estate due diligence checklist: inspection, title and survey, environmental review, leases and income, zoning and lender checks.
Commercial due diligence is the review a buyer does before closing to confirm a property’s condition, title, income, legal status and environmental risk.
It covers the physical building, the title, the environment, the leases and income, and the local rules. Due diligence is one step in how to buy commercial property in Colorado.
This checklist follows the order most Colorado deals run in. Each item notes what to request and who usually supplies it. It also names the matching deadline in the Colorado Real Estate Commission’s commercial contract (form CBS3).
How Due Diligence Deadlines Work in a Colorado Contract
In Colorado, the buyer’s checks run on a deadline table written into the contract, and each deadline is strict.
The Commission’s commercial form treats time as “of the essence.” If the buyer misses a deadline to send written notice to terminate, it accepts that condition as satisfactory. The right to terminate for it is gone. So the checklist is also a calendar.
| Check | Deadlines in the Colorado commercial contract |
|---|---|
| Title | Record Title, Record Title Objection, Off-Record Title, Off-Record Title Objection, Title Resolution |
| Survey | New ILC or New Survey; Objection; Resolution |
| Water and minerals | Water Rights Examination; Mineral Rights Examination |
| Seller disclosure | Seller’s Property Disclosure Deadline |
| Physical inspection | Inspection Termination, Inspection Objection, Inspection Resolution |
| Insurance | Property Insurance Termination |
| Seller documents and zoning | Due Diligence Documents Delivery, Objection, Resolution |
| Environmental | Environmental Inspection Termination (can be extended for a Phase II) |
| Accessibility | ADA Evaluation Termination |
| Tenants | Estoppel Statements; Estoppel Statements Termination |
| Financing | New Loan Application, New Loan Terms, New Loan Availability, Appraisal |
Set realistic dates before you sign. A Phase I report, a survey and a lender’s appraisal each take time to order and deliver.
Physical Inspection
Have the building inspected for hidden problems before you buy.
- The structure, roof and building systems
- Hidden problems such as mold or asbestos
- In mountain towns, weather damage, since buildings wear faster there
The Colorado form lets the buyer inspect the roof, walls, structure, electrical, plumbing, HVAC and other mechanical systems. It also covers utility and communication service, nearby road projects and off-site noise or odor.
The buyer pays for its inspections and must repair any damage they cause. The buyer then has three choices:
- Terminate by the Inspection Termination Deadline.
- Object in writing by the Inspection Objection Deadline, listing what the seller must fix.
- Resolve the objection in writing by the Inspection Resolution Deadline, or the contract ends.
Sending an objection gives up the separate right to terminate on inspection, so choose the route deliberately. Unless the contract says otherwise, the property is sold “as is.”
Insurance and Accessibility
Get a property insurance quote during the inspection period, not after. The form gives the buyer a Property Insurance Termination Deadline if the coverage, terms or premium are unsatisfactory. This matters in wildfire-prone parts of Colorado.
The buyer may also commission an evaluation of whether the property complies with the Americans with Disabilities Act. The form gives a separate ADA Evaluation Termination Deadline for it.
Title and Survey
Confirm exactly what you are buying and that the title is clean.
Title insurance covers loss from defects in the title. A survey confirms the lot size and dimensions and checks for encroachments, and commercial lenders usually require one. Check for easements that can come with a property.
The Title Commitment
By the Record Title Deadline, the buyer receives a title commitment for an owner’s policy in the amount of the price. The buyer also receives copies of the plats, covenants and other documents listed as exceptions.
Ask for owner’s extended coverage (OEC). Under the Colorado form, OEC commits to delete or insure over six standard exceptions:
- Parties in possession
- Unrecorded easements
- Survey matters
- Unrecorded mechanics’ liens
- The gap between the commitment date and recording of the deed
- Unpaid taxes and assessments before the closing year
The contract sets who pays any added OEC premium. The title company may require a new survey before it will grant OEC.
The Survey
Colorado contracts offer two levels: an Improvement Location Certificate (ILC) or a full survey. The parties name the survey form in the contract, such as an ALTA/NSPS Land Title Survey. That is the national standard set by the American Land Title Association and the National Society of Professional Surveyors.
New ALTA/NSPS standards took effect February 23, 2026, replacing the 2021 version. They add an optional Table A item for an encroachment summary table. Table A items are optional extras, so list the ones your lender and title company need when you order.
Water and Mineral Rights
Confirm in writing which water rights, wells and water shares transfer, and who owns the minerals.
In Colorado, the surface can be sold without the mineral estate or the water rights. The commercial contract has separate Water Rights Examination and Mineral Rights Examination Deadlines. If a well transfers, it may need a change-in-ownership or registration form with the Colorado Division of Water Resources. Land-specific checks are covered in what to check before buying commercial land in Colorado.
Environmental Review
Order a Phase I environmental site assessment.
Owners can be strictly liable for contamination on property they own, even if they did not cause it. A Phase I done under EPA’s All Appropriate Inquiries rule supports protection for buyers who did not cause the contamination.
What a Phase I Covers
EPA recognizes ASTM E1527-21 as meeting its All Appropriate Inquiries rule. The older E1527-13 version stopped qualifying on February 13, 2024. Rural or forested land can use ASTM E2247-23 instead.
A compliant Phase I includes:
- Interviews with current and past owners, operators and occupants
- A review of historical sources and of federal, state, tribal and local records
- A visual inspection of the property and the adjoining properties
- A search for environmental cleanup liens
- A written report signed by a qualified environmental professional
A Phase I does not usually sample soil, water or building materials. Asbestos, radon, lead paint and mold are outside its standard scope unless you add them.
Timing Rules
The inquiry must be done or updated within one year before you acquire the property. The interviews, records review, site visit and lien search must be within 180 days. An old report from the seller rarely meets both tests.
If the Phase I recommends a Phase II, the Colorado form can extend the Environmental Inspection Termination Deadline. A Phase II takes samples of soil, groundwater or building materials for testing. The contract says who pays for it.
Leases, Rent Roll and Income
Confirm the income the price is based on.
- The rent roll, with each tenant’s rent and lease dates; see reading the rent roll
- Every lease
- Tenant estoppel certificates, which confirm the rent, deposit and lease expiry and any claims against the landlord
- The operating history behind the net operating income; see checking the NOI
Seller Due Diligence Documents
The Colorado commercial form lists documents the buyer can require the seller to deliver. Check the boxes for the ones you need:
- All current leases and amendments
- Service, maintenance and management contracts
- Property tax bills for the years you choose
- As-built plans for the building and tenant improvements
- Operating statements for the years you choose
- A rent roll accurate to the contract date
- A schedule of tenant improvement work the seller still owes
- Insurance policies and recent claims
- Soils, survey and engineering reports
- Existing Phase I and Phase II environmental reports
- ADA reports and studies
- Permits, licenses and other use authorizations
If a document arrives late, the buyer gets the earlier of closing or ten days after receipt to object. The seller also cannot change, extend or cancel a lease, or sign a new one, without the buyer’s consent.
Tenant Estoppel Statements
Under the Colorado form, the seller requests an estoppel statement from every tenant. Each one confirms:
- The lease start date and scheduled end date
- That the lease is in full force with no unlisted amendments
- Any advance rent, concessions and deposits paid
- The current rent
- That neither side is in default
- That the attached lease is the true and complete copy
If a tenant will not sign, the seller must sign an estoppel statement instead. Compare every estoppel line with the rent roll and the lease.
Zoning, Permits and Local Rules
Check that the current use, and any use you plan, is allowed.
Colorado Springs has revised its building rules for wildfire-prone areas. Grand Junction is phasing in an irrigation design certification, delayed to January 1, 2029. In resort towns, check any proposed lodging or vacancy taxes. Start with what commercial zoning allows.
The Colorado form gives the buyer a right to terminate over unsatisfactory zoning or use restrictions by the Due Diligence Documents Objection Deadline. Ask the planning department for a zoning verification and any open code cases.
Local taxes belong on this list too. In Archuleta County, voters decide on November 3, 2026 whether lodging outside Pagosa Springs town limits carries a 6% tax from January 1, 2027. RMCRE’s Pagosa Springs Q2 2026 market report advised pricing that outcome into hospitality deals before the vote.
Financing and Lender Checks
The lender runs its own due diligence alongside yours. It usually includes a site tour, a financial review and checks on the sponsor and the borrowing entity. Budget for the fees in commercial closing costs.
Line the lender’s work up with the contract. The Colorado form has separate deadlines for the loan application, loan terms, loan availability and the appraisal. If the appraisal comes in below the price, the buyer can object or terminate by the Appraisal Objection Deadline.
The Full Checklist at a Glance
Use this table as a working list with your broker, attorney and lender.
| Item | Who supplies it | Checked by |
|---|---|---|
| Seller’s Property Disclosure | Seller | Buyer and broker |
| Title commitment and exception documents | Title company | Buyer and attorney |
| ILC or ALTA/NSPS survey | Surveyor | Buyer, title company, lender |
| Water rights, wells, water shares | Seller and records | Buyer, water attorney |
| Mineral rights | Title records | Buyer and attorney |
| Building inspection | Inspector | Buyer |
| Insurance quote | Insurer | Buyer |
| Phase I environmental site assessment | Environmental professional | Buyer and lender |
| ADA evaluation | Consultant | Buyer |
| Leases, rent roll, operating statements | Seller | Buyer and CPA |
| Tenant estoppels | Tenants or seller | Buyer and lender |
| Zoning verification and permits | Planning department | Buyer |
| Appraisal | Lender’s appraiser | Lender and buyer |
Frequently Asked Questions
How long does commercial due diligence take?
As long as the contract’s deadlines allow. The Colorado form sets each deadline as a date the parties choose, so negotiate enough time for reports that take weeks to order. A Phase II or a slow tenant estoppel can push the timeline.
Who pays for due diligence?
The buyer usually pays for its own inspections, tests and reports. The Colorado contract lets the parties assign specific costs to the buyer, the seller or both. Examples are the Phase I, a new survey and the extended title premium.
Is a Phase I environmental assessment required?
The Colorado form makes it an option, with a box for who orders and pays for it. It is still worth ordering. A Phase I that meets EPA’s All Appropriate Inquiries rule supports the buyer’s defense to liability for contamination it did not cause. Ask your lender whether it requires one.
What is a tenant estoppel certificate?
It is a signed statement from a tenant confirming the lease terms, rent, deposit and that no one is in default. It stops the tenant from later claiming different terms against the new owner.
Can I walk away after due diligence?
Yes, if you send a written notice to terminate before the matching deadline. Under the Colorado form, the earnest money must then be returned to the buyer on time. After the deadline, that right is gone.
Due Diligence With a Local Broker
RMCRE brokers hold the deal together through inspection and financing, working in the market they know. See RMCRE buyer representation.
