Due Diligence

Due diligence in commercial real estate refers to the comprehensive review a buyer or tenant undertakes before committing to a transaction. For healthcare tenants leasing space, due diligence includes reviewing the landlord's financial stability, verifying zoning permits for the intended medical use, inspecting the physical condition of the space, reviewing existing CAM audit records, and confirming that the building meets ADA requirements. For buyers of medical office buildings, due diligence expands to include title searches, environmental assessments (Phase I/II), structural inspections, lease roll analysis, and lender approval. In Illinois, the due diligence period is typically negotiated in the purchase contract, ranging from 30 to 60 days. Skipping or rushing due diligence is one of the most common and costly mistakes healthcare operators make.

Due diligence protects healthcare operators from costly surprises — structural defects, zoning restrictions, hidden CAM liabilities, or landlord financial distress. It is always worth the time and cost of a thorough investigation before committing.

Before signing a lease in a Schaumburg MOB, a cardiology group's attorney discovers the building does not have the required electrical capacity for their imaging equipment — a costly finding avoided because of thorough due diligence.