Commercial Property Due Diligence: What to Check Before You Sign in NSW

Intro

Buying commercial property isn’t just about the location and the lease. It’s about what’s on title, what’s been disclosed—and what’s quietly missing.

Whether you're purchasing an office, warehouse, shopfront or development site, legal due diligence is your one shot to confirm income, uncover risks, and walk away if something doesn’t stack up.

Here’s what to check before you exchange contracts in NSW.

1. Title, Zoning & Use Restrictions

Start by confirming that what you’re buying—and what you plan to do with it—is legally sound.

• Title Search - Look for easements, covenants, restrictions on use or access

• Zoning (LEP) - Can the land be used for your intended purpose?

• 10.7 Planning Certificate - Reveals zoning, overlays, bushfire/flood risk, proposed planning changes

• Contamination - For industrial or older sites, consider environmental reports or check for EPA notices

Zoning must match actual use. If it doesn’t, you may face compliance issues, valuation concerns, or finance delays.

2. Lease Review (If the Property is Tenanted) or Current Market Rent (If the Property is not Tenanted)

You’re not just buying the land—you’re inheriting the lease. The terms of that lease directly impact your income, rights, and resale value.

Check:

• Key commercial terms - Rent, outgoings, options, rent reviews, CPI or market-linked increases

• Lease expiry / renewal rights - Do you want vacant possession? Can the tenant stay indefinitely?

• Tenant incentives - Are there rent-free periods, fit-out contributions, or rebates not reflected in the rent figure?

• Make-good obligations - Who pays for reinstatement at lease end? Is it enforceable?

Ask for:

• A full copy of the lease

• Any deeds of variation

• Written confirmation of rent and incentive history

If the Property is not tenanted and you intend to lease it after settlement, you will need get a good idea of the current market rent. Don't rely on headline rents provided by agents or available on real estate sites—they often won't take into account incentives or rent-free periods or concessions.

Never rely on a lease summary alone—go to the source documents.

3. Legal & Building Compliance

A lease doesn’t guarantee compliance. As the incoming owner, you take on legal liability from day one.

Review:

• Fire safety certifications (AFSS), especially in multi-tenanted buildings

• Occupation Certificates for works carried out

• Asbestos registers (legally required for older commercial premises)

• Notices from Council or WorkSafe—check for outstanding orders or compliance breaches

A compliant tenant fit-out doesn’t mean the building is compliant overall.

4. Strata Title (If Applicable)

If you're buying a lot within a commercial strata scheme:

• Review the strata records - Look for unresolved defects, special levies, or active disputes

• Budget & financials - Are levies realistic? Are they covering long-term maintenance?

• By-laws - Do they restrict signage, use of the property, or renovations?

Consider ordering a professional strata report—especially if you don’t have time to read 500 pages of minutes and balance sheets.

5. GST, Outgoings & Settlement Adjustments

These are often overlooked in early negotiations—but they directly affect your bottom line.

• GST status - Is the property GST-free under the going concern exemption, or under the margin scheme?

• Outgoings - Who pays land tax, council rates, water, strata? Are these fully recovered from the tenant?

• Rent & outgoings adjustments - Confirm how they will be apportioned at settlement

Get your accountant involved early—don’t leave it until after the contract’s exchanged.

How to Get Commercial Property Due Diligence Right

• Always review the contract and disclosure documents before exchange

• Ask for the full data pack, don’t rely on the agent’s summary

• Check what’s not disclosed, like planning certificates, DA consents, lease variations

• Flag concerns early and negotiate amendments where needed

Why It Matters

In NSW, once you exchange contracts, you’re legally bound—often with limited ability to walk away. If the zoning is wrong, if the lease is one-sided, or if the tenant has stopped paying, it’s your problem now.

Due diligence is your last chance to walk away—or negotiate better terms.

Need Help?

I help buyers across NSW with commercial property due diligence and contracts, lease documents and planning risks—quickly, clearly and at a fixed price. No jargon. Just practical advice you can act on.