A Due-Diligence Checklist for Commercial Property Transactions
Commercial real estate transactions in India carry a particular set of risks that don't always surface until well after a deal has closed. A structured due-diligence process — carried out before terms are finalised — remains the single most effective way to avoid disputes later.
1. Title Verification
Confirm a clean, unbroken chain of title going back at least 30 years, and check for any pending litigation, encumbrances, or mortgage charges registered against the property.
2. Regulatory and RERA Compliance
For any project falling within the scope of state RERA regulations, confirm project registration status, promoter disclosures, and whether any complaints or regulatory proceedings are pending against the developer.
3. Statutory Approvals
Verify that building plan sanctions, occupancy certificates, and applicable environmental or fire safety clearances are in place and match the actual constructed structure — deviations are a common and costly surprise.
4. Existing Encumbrances and Litigation
Search for pending civil suits, execution proceedings, or insolvency filings involving the seller or developer, as these can directly affect a buyer's or tenant's rights even after a transaction closes.
5. Lease and Occupancy Terms
For income-generating commercial property, review existing lease agreements carefully — including renewal rights, escalation clauses, and any restrictive covenants that could affect future use or resale.
6. Development and Builder-Buyer Agreements
Where the transaction involves an under-construction property, scrutinise the development agreement or builder-buyer agreement for possession timelines, penalty clauses for delay, and the allocation of obligations between promoter, landowner, and allottee.
Why This Matters
Disputes arising from inadequate due diligence are rarely resolved quickly — they often end up before Real Estate Regulatory Authorities, Appellate Tribunals, or civil courts, with resolution taking years. A thorough diligence process at the outset remains far less costly than litigation after the fact.
This article is intended as general commentary and does not constitute legal advice. For a transaction-specific diligence review, please get in touch with our Real Estate practice.
