Pre-Lease Due Diligence Service
We scrutinize each aspect of your property and lease, leaving no stones unturned!
We employ adept engineers and experienced lawyers for best results.
We provide accurate findings for making the right decisions.
Leases are binding legal agreements which can stay binding for several decades. Leases form the basis of various businesses and building ownership and outline the rights, responsibilities and charges for the duration of the lease period.
Due to their binding nature, leases often give rise to disputes after they are signed. You may encounter some unpleasant surprises about obligations or legal implications that you weren't aware at the time of signing the lease. You may also discover deficiencies or issues with the property which put a question on the profitability of your project.
Thankfully, such unpleasant surprises can be avoided by going for pre-lease due diligence before you make the agreement. Due diligence services clearly lay out the obligations of all parties, preventing any conflict over responsibilities down the line. The process can also help you uncover potential risks and issues with your property and help you make an informed decision on whether or not to invest.
New York Engineers offers full-scale pre-lease due diligence service for commercial and residential properties. We provide thorough due diligence service that inquires and investigates the property and the lease agreement before a binding agreement is reached. Our team consists of experienced lawyers and engineers who can inspect your property and documents and help you do your homework before you invest. Our team will also explain the lease terms in simple language so that you don't ever face any confusion.
We will spot any red flags in your property and lease through our due diligence and notify you on time. Based on our information you can decide the right way to go and attain an advantageous position to negotiate the terms of the lease. We empower you with all the information you need before signing the lease so that you don't land up in trouble later on.
The pre-lease due diligence is a multi-faceted process which involves scrutiny of documents, income statements, the property and related aspects. We adopt both qualitative and quantitative methods while performing due diligence to uncover any potential risks or issues with your property.
The exact process of due diligence will depend on your investment objectives.
We are giving you a brief overview of the steps that we usually take for commercial or residential real estate :
You are agreeing to comply with applicable laws and regulations when you enter into a lease. The idea may seem obvious, but some local laws or regulations can take you by surprise. For example, if you plan to operate a pub or bar, you need to find out if the area has any regulations or noise restrictions which might affect your business.
On top of that, you also have to be sure that the building or property is legal and not violating any codes or regulations like zoning or environmental restrictions. Our lawyers and engineers are well versed with the federal and local laws of each state and can help you determine the legality of your project.
We will also scrutinize the proposed lease and help you understand every clause in detail. You can also get consultation on various acts like the Retail Leases Act which allows extra protection to tenants for specific circumstances.
It's really important to conduct a title search and determine the transferable right to the property. We will ensure that the seller has the title to the property and owns the right to transfer it. The seller may have absolute ownership, right of perpetual lease or tenancy rights. The nature of rights will decide your own rights and what can be transferred.
We will inspect the Preliminary Title Report (PTR) for details on land, title owner, claims and anything you need to know. The title search enables you to invest with confidence by discovering any marks on the title. Our lawyers will also check a title for any claims or liens and notify you in advance.
Encumbrances Over Property
We will verify whether the property in question has any encumbrances, mortgages or charges levied upon it. The presence of encumbrances can have a significant financial impact on you and your business and you have the right to full details on the subject.
Our lawyers will check up with the authorities and seller to determine if your property has any claims against it. The review of the title will also help us determine the presence of any encumbrances.
You will obviously want to assess the condition of your property before you sign the agreement. We can conduct a site survey to clarify the lot size, boundaries of the lot and topographical details. The survey will also help us to identify any restrictions, easements or setbacks concerning the property.
We will also conduct a thorough inspection of the building and related components to find out any deficiencies, risks or red flags you need to be aware of. Our team can also undertake a complete Property Condition Assessment (PCA) to determine the health of your property and the necessary capital and repair expenditures you may need to make.
Our inspectors will perform a walk-through survey of every unit and cover all components including wall assemblies, building envelope, electrical systems, HVAC, roofing, flooring, life safety systems, structural frames, plumbing and more. We leave no stones unturned so that you can effectively identify all areas or repairs, maintenance or replacement along with estimated costs for proper budgeting.
The assessment will also help you determine the short and long-term capital expenditures so that you can decide whether the project will be profitable for you. We will also help you discover any code violations so that you can take corrective measures on time to avoid penalties or legal hassles.
You should know if there are any environmental concerns related to the property in question. According to the laws, you will be responsible for any contamination or threats on your property. That's why it's really important to carry out environmental assessments before signing the lease.
We can undertake a Phase I environmental site assessment (ESA) to identify all environmental concerns of the property. You will also get to know about the severity of each concern along with their implications. We will also provide recommendations for remedial actions or cleanup.
You must conduct an ESA to determine your environmental liabilities while applying for loans or finance.
Life and Safety
Life and safety checks are an integral part of the due diligence process. Timely life and safety checks can prevent arguments and anguish later on. Based on the terms of the lease, you might be responsible for making the property fire compliant.
We devote adequate time on fire detection, fire alarm and fire fighting systems ensuring they work as claimed. Our team will also check if you have an adequate number of fire equipment or sprinklers on the premises. We also check if there are required numbers of fire exits, clearances are present to ensure safety.
We will also check the necessary fire certificates and consult with the owner as necessary.
Many clients buy income-generating properties which involve leases. The income from the leases determines how much you can earn and for how long. We carry out lease audits to verify details like lease dates, amounts, signage t help you understand your cash flow and liabilities.
The lease audit will take note of any temporary discounts or deals made as part of the terms like the use of parking. We will also dig out the pending tenant debt, late payments, or eviction notices. You will be able to get a clear picture of your potential revenue to guide your investment.
While this may sound simple, the job is often tenacious as a single apartment can come with 200 leases! Our team helps you save your effort and time by taking on the laborious task.
Generating an idea of your cash flow is only a part of the equation. You will also need to figure out your expenses and costs. The building might have a contract with an internet provider, security agency or pest control company. We will review the contracts to determine you are getting the right prices and a good deal. Our due diligence will also review historical operations to give you a picture of your costs.
We will perform a financial audit to fact-check the numbers given by the landlord. Our team will review past financials like bank statements, rent rolls to determine the operating income and expenses.
We will also identify areas you can save money- maybe you can get a cheaper insurance policy, stop overpaying your staff or ensure tenants are paying their dues. Our information enables you to create a strategic budget maximizing your profit.
We can conduct a market survey to help you estimate how much you can earn in the future. Our team will study comparable properties in the sub-market on variables like occupancy type, rent, amenities and so on. The survey can help verify your underwriting assumptions of occupancy rates and rents. If you have planned any modification or renovation, we can help you gauge the premium you can charge over the normal rent.
Our due diligence can include other steps as per the requirements of a project. We adopt a client-centric approach and evolving process to accommodate your unique needs and preferences.
Due diligence done at the right time can affect your property for many years to come. New York Engineer's pre-lease due diligence helps you manage your investment successfully without running into unpleasant surprises down the road. We present a complete overview of where you stand and arm you with the right information to avoid costly mistakes after the lease is signed.
Our multi-disciplinary engineers provide an accurate assessment of your property identifying any deficiency or areas of concern effectively. The lawyers in our team scrutinize every legal document painstakingly to uncover facts and key terms and conditions that may affect your investment. Our financial analysts draw up the most realistic numbers helping you gauge your position.
Don't make the mistake of staying in the dark about your investment. With our help, you will be able to see clearly and find the right path to take towards profitability. We are always focused on maximizing your return on investment and giving you complete peace of mind to follow your investment in the best possible way.
Contact us today to know more about our pre-lease due diligence.