We were 12 days from closing when the lender came back with a new requirement.

That’s the story. Except it’s not just one story — it’s the same story I’ve watched play out more times than I can count, with different buyers, different buildings, and different lenders, but the same underlying pattern. A deal that felt finished wasn’t. And the reason almost always traces back to the same set of failure points, most of which were knowable before they became crises.

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Tell Me About Your Deal

Why commercial deals fall apart

Most deals don’t fail because of bad faith. Sellers aren’t hiding things. Buyers aren’t being careless. Lenders aren’t inventing requirements. Deals fall apart because a commercial real estate transaction requires a dozen independent systems — legal, financial, environmental, physical, regulatory — to align on the same timeline, and those systems don’t communicate with each other in real time.

The buyer has a commitment letter. The commitment letter has conditions. Those conditions require a satisfactory appraisal, clean title, acceptable environmental, a property inspection that doesn’t surface material issues, and documentation the lender’s underwriter is satisfied with. Each of those is its own potential failure point. When one slips, it rarely slips quietly.

Financing contingencies: the most common trigger

Experienced buyers treat the lender commitment letter as a starting line, not a finish line. What the letter actually says is: we will lend you this money, subject to the following conditions. Those conditions are the deal. A buyer who reads the commitment letter carefully on day one — and maps out every condition against the closing timeline — is in a fundamentally different position than a buyer who files it away after the handshake.

One timing question I get regularly: when should I engage the lender? A lot of buyers prefer to get through diligence before formally engaging a lender — they want to know what they’re actually buying before they start the financing process. That’s a reasonable approach. But if that’s your plan, you need to build your closing timeline accordingly. The post-diligence period has to be long enough to accommodate loan processing, appraisal ordering and completion, underwriting review, and the inevitable back-and-forth on conditions. None of that moves quickly, and appraisers in particular run on their own schedule. I’ve seen appraisals take three weeks longer than expected simply because the appraiser’s queue was backed up. If your contract gives you 30 days post-diligence and the appraiser takes 45 days to deliver the report, you have a problem that has nothing to do with the merits of the deal. Build in the buffer before you sign the purchase agreement, not after.

The appraisal itself is the condition that creates the most drama. If the property doesn’t appraise at the purchase price, the lender’s loan amount adjusts down to match. The buyer either covers the gap in cash, renegotiates the price, or loses the deal. Order the appraisal as soon as you engage the lender. If there’s a gap, it’s better to know in week two of financing than in week six.

The second financing failure mode is the last-minute underwriter request. Underwriters review files they didn’t originate. They sometimes see things loan officers didn’t flag, and they ask for additional documentation — a lease amendment, an updated environmental clearance, a tenant estoppel that wasn’t in the file. These requests are usually resolvable. What they’re not is instant. When they arrive at day 35 of a 45-day closing, they become emergencies.

Title objections

The title commitment arrives early in diligence and gets treated as background noise. It shouldn’t. The exceptions section lists the conditions and encumbrances the title company won’t insure over — recorded easements, restrictions, covenants, and occasional gaps in the chain of title that require curative work.

Most exceptions are benign. A utility easement along the back of the property. A drainage agreement from 1987. Standard stuff. But occasionally there’s something that isn’t — an encroachment revealed by the survey, a recorded use restriction that conflicts with the buyer’s plans, an access easement that’s shared and contested. Title curative work takes time. Sometimes it requires a quiet title action. Sometimes the seller needs to obtain a release from a lienholder who is hard to locate. The earlier you identify these issues, the more runway you have to resolve them.

Send the title commitment to your attorney on the day it arrives. Not the day before closing.

Survey issues

A new survey ordered during diligence occasionally reveals something that wasn’t in the listing, wasn’t in the seller’s disclosure, and wasn’t visible during a walkthrough. An encroachment from a neighboring structure onto the subject property. A fence line that doesn’t match the legal description. A shared driveway that crosses the property line in a way nobody had formalized.

These issues are solvable, but not quickly. An encroachment agreement requires negotiation and drafting. A boundary issue may require a corrected legal description. Either can cause a title company to pause on its commitment until the issue is resolved. Order the survey on day one.

Seller disclosure problems

This is where buyers sometimes get a surprise they didn’t see coming — and it’s almost never the roof or the environmental. The issues that surface in seller disclosure disputes almost always involve the financial picture of the property: the rent roll, the profit and loss statement, the actual lease terms versus what was represented, or the occupancy numbers used to underwrite the deal.

A tenant shown as current who is actually in default. A lease renewal option that was exercised but not reflected in the documents provided. Vacancy that was papered over with a short-term occupancy agreement that expires shortly after closing. Expense figures that don’t reflect the property’s actual operating costs. These discrepancies don’t always represent intentional misrepresentation — sometimes sellers are working from stale information, or a broker assembled the package without full visibility into the current state of the leases. But they create real disputes when the buyer closes expecting one set of economics and inherits another.

The protection is in the diligence. Get current estoppels from every tenant. Reconcile the rent roll against actual lease documents. Ask for the trailing 12 months of actual operating statements, not just a pro forma. The seller’s representations give you a legal remedy if something turns out to be false. Your own diligence tells you whether the numbers add up before you close.

What experienced buyers do differently

They order the survey and the Phase I on day one. They send the title commitment to counsel immediately. They think through the financing timeline before signing the purchase agreement — whether they engage the lender during diligence or after, they make sure the post-diligence runway is realistic given appraisal timelines, underwriting review, and the conditions that will need to be satisfied. They reconcile the rent roll against the leases. They don’t assume the financing is done until the wire is confirmed.

And they use the back half of the diligence period for resolution and negotiation, not for starting the checklist. The contingency period isn’t a review window. It’s a resolution window.

Back to my client

He closed — three days late, with a short extension that cost him a negotiated fee. The lender’s last-minute requirement was resolvable. It just took eleven days of rapid document collection that nobody had planned for, two attorneys working over a weekend, and a seller who was gracious enough to grant the extension rather than declare a default.

He got his building. The deal worked.

But I’ve watched the same scenario end differently. The difference, almost always, is when the buyer started — and whether the people around the table had seen enough closings to know that a signed purchase agreement is the beginning of the hard part, not the end of it.

If you’re in diligence on a deal right now and want a transaction attorney reviewing the moving parts, the earlier in the process, the more options you have. Reach out.

Meanwhile, the clock is running.

The due diligence period is the most important phase of a commercial real estate transaction, and it’s the one most buyers treat as a formality. You’ve already decided you want the building. The inspection feels like paperwork standing between you and the closing table. That’s exactly when expensive surprises happen — not because buyers are careless, but because they don’t have a systematic way to work through everything that matters before the contingency period expires.

One thing worth saying up front: the seller’s representations and warranties, and the documents the seller hands over, are not a substitute for your own diligence. Reps and warranties give you a legal remedy after the fact if something turns out to be false. Diligence is what tells you, before you close, whether the property actually is what you think it is. The goal isn’t paperwork compliance — it’s making sure you’re getting the deal you actually signed up for.

What follows is the checklist I use. Save it. The items here are the ones that actually kill deals, delay closings, or create problems you’re still managing two years after you own the building.

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Emai Mike

Environmental

Start here, because environmental issues are the ones with the longest tail. A Phase I Environmental Site Assessment is standard on most commercial transactions, and most buyers order one. Fewer buyers actually read it carefully.

The section that matters most is Recognized Environmental Conditions — the Phase I’s formal term for documented or suspected contamination from current or historical use of the property, adjacent properties, or nearby operations. A dry cleaner next door twenty years ago. A fuel storage tank that was removed but never tested. Underground utility corridors with unknown history. These are the items that lead to a Phase II — actual soil and groundwater testing — and potentially to remediation costs that dwarf the purchase price adjustment you thought you were getting.

Also read the data gaps section, and don’t skip past it. Every Phase I will identify gaps — historical records that couldn’t be located, prior uses that couldn’t be confirmed, time periods with no available documentation. A data gap isn’t automatically a problem, but an environmental professional has to assess whether the gap is significant enough to affect the conclusions of the report. A Phase I with several unresolved data gaps on a property with an industrial history deserves more scrutiny than the clean summary page might suggest. Ask your environmental consultant directly whether any data gaps affected their conclusion, and if so, how.

Order the Phase I immediately. If it flags anything, don’t wait to order the Phase II.

Zoning and use compliance

Confirm that your intended use is permitted under current zoning — not assumed, confirmed. Then confirm that the existing use is legally conforming. These are two different questions.

A nonconforming use may have been operating legally for decades under grandfather status, but that status typically cannot be expanded and sometimes cannot be restored if the use is interrupted. If the building is destroyed and needs to be rebuilt, current zoning may not permit the same use or the same footprint. A zoning compliance letter from the municipality is a standard, inexpensive document that answers both questions definitively.

Don’t stop at use. Confirm the development standards too: setbacks, required open space, yard requirements, parking ratios, height limits, and lot coverage. An existing building can be fully compliant on use and still be a legal nonconforming structure on these standards — meaning if you ever need a variance, an addition, or a rebuild, you may find the building doesn’t meet current requirements even though it’s been sitting there for thirty years without issue. You want to know that going in, not when you’re trying to expand.

And if your transaction involves any change of use, find out whether that change triggers impact fees or development fees from the municipality or utility provider. Many jurisdictions assess these specifically when a property converts to a higher-intensity use — more parking demand, more water and sewer capacity, more traffic generation. These fees can run into real money and are easy to miss because they don’t surface until you apply for permits. Get a number, or at least a methodology, during diligence, not after you’ve closed.

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Access and easements

Does the property have legal access to a public road? Not practical access — legal access. Shared driveways, private access easements, and flag lots can all have practical access while the legal picture is more complicated.

Easements for utilities, drainage, shared parking, and ingress and egress can encumber use significantly and don’t always appear in obvious places. This is one of several reasons you’ll want a title commitment and a current survey — and we’ll spend a full post in a few weeks walking through exactly what to look for in both. For now, the short version: order both early, and review them together rather than separately.

Service contracts

What runs with the building? HVAC maintenance agreements, elevator service contracts, landscaping, security monitoring, pest control — many of these are assignable and survive the sale by default unless terminated. Know what you’re assuming before closing. Some of these contracts have early termination fees. Some are on terms you’d never have agreed to on your own. Request and review every service contract during diligence, not after.

Tax history

Review three to five years of assessed values and tax bills. Understand the trend. Understand whether there are any delinquencies or pending appeals that will survive the closing. And understand what this transaction may trigger going forward.

In Indiana, the sale price is a significant input to the assessor’s next review. If you’re buying at a price substantially above the current assessed value, you should expect upward pressure on the assessment after closing. That’s not a reason not to buy — it’s a number to underwrite. Model the tax scenario that follows a reassessment and make sure your NOI still works.

Estoppel certificates

If the property is tenanted, require estoppel certificates from every tenant before closing. An estoppel is a signed statement from the tenant confirming the lease terms, the rent currently being paid, any landlord defaults the tenant is aware of, and any side agreements or modifications not reflected in the written lease.

What a tenant says in an estoppel binds them. That’s the value of the document. It also tells you, quickly, whether there’s a gap between the lease on paper and the relationship on the ground — which is exactly the kind of thing the seller’s representations about the leases won’t necessarily catch. A tenant who is reluctant to sign an estoppel, or whose estoppel doesn’t match the lease you were shown, is telling you something worth knowing before you close.

If you’re financing the acquisition, ask your lender early whether they’ll require Subordination, Non-Disturbance, and Attornment agreements from tenants. SNDAs and estoppels both require tenant cooperation and signatures, and tenants are more responsive when you only have to go to them once. Request both at the same time rather than circling back a second time after your lender raises it later in the process.

Deferred maintenance

A commercial property inspection will identify deferred maintenance, but ask your inspector specifically about the items most likely to create immediate capital expenditure: roof condition and age, HVAC systems and remaining useful life, electrical service capacity, plumbing, and ADA compliance status.

These are the items that generate year-one surprises for buyers who didn’t price them in. A roof with three years of useful life remaining isn’t a deal-killer — it’s a negotiating point, a reserve line item, or both. The mistake is discovering it after closing when it’s just an expense with no offset, and a seller’s representation that the building is in “good condition” won’t reimburse you for a roof replacement.

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Utility capacity

Confirm that the building has adequate electrical, water, and sewer capacity for your intended use — particularly important if you’re changing the use, such as converting an office building to a restaurant or a warehouse to light manufacturing. Utility upgrades are expensive and often require coordination with the municipality or utility provider on timelines you can’t fully control.

There’s a second utility question that gets missed even more often: confirm where the utility service actually runs to reach the building. Service should come from a recorded easement or from the public right-of-way along the street. It’s not unusual to discover that a water line, sewer lateral, or electrical service physically crosses a neighboring property with no recorded easement protecting that access. If that’s the case, the neighboring owner could theoretically block or disrupt service, and you’d have no recorded right to be there. This is exactly the kind of issue a careful survey and title review will catch — another reason both documents matter as much as the inspection itself.

One final point on timing

Every item on this list is more manageable when you start it on day one of the diligence period. Environmental reports take time. Title curative work takes time. Estoppels and SNDAs require the cooperation of tenants who have their own schedules. Survey scheduling depends on the surveyor’s availability.

Buyers who treat the first two weeks of diligence as runway and the last week as deadline time consistently have worse outcomes than buyers who start everything immediately and use the back half of the period for resolution and negotiation. The contingency period isn’t a review window. It’s a resolution window — and resolution takes time you don’t get back. And it’s your own diligence, not the seller’s paperwork, that tells you whether the deal in front of you is the deal you actually agreed to.

Tell Me About Your Deal

Want a copy of this checklist as a clean PDF you can use during an actual diligence period — with space for notes and status tracking on each item? Reply to this email with “checklist” and I’ll send it over.

Not because the rent increased. Because the rest of the lease was never fully worked through — by either side.

This is the pattern I see most often, and it’s not a landlord-versus-tenant story. Both parties negotiated the headline number carefully and treated the remaining thirty pages as boilerplate. The result wasn’t a landlord “winning” at the tenant’s expense. It was a relationship that became adversarial by year three because nobody had been precise by year zero. That’s bad for the tenant’s budget and bad for the landlord, who now has a dispute, an audit request, and a tenant looking at their renewal option with suspicion.

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Lease term is rarely the biggest issue

Everyone wants to talk about term — length, renewal options, the rate at which those options kick in. Those things matter, and they’re negotiated in the open. The provisions that actually determine how the lease performs over time are the ones in the definitions, the CAM mechanics, and the operational rights sections. These aren’t buried by design. They’re just dense enough that both sides tend to default to market-standard language without thinking through what it means for their specific situation.

Here’s where I’d focus, for either side of the table.

CAM language: clarity benefits everyone

Common Area Maintenance charges are contractually defined — and that definition varies significantly from lease to lease. For landlords, a well-drafted CAM provision means predictable, defensible cost recovery and fewer disputes down the line. For tenants, it means knowing what occupancy actually costs before you sign, not finding out at reconciliation.

CAM provisions commonly include management fees, administrative costs, and amortized capital improvements — these are legitimate components of operating a property and landlords are entitled to recover them. The issue isn’t whether these items belong in CAM. It’s whether they’re clearly defined, consistently applied, and understood by both parties at signing. A landlord who is upfront about what’s included avoids the year-three conversation where a tenant feels blindsided. A tenant who reads the definition carefully avoids being surprised.

The exclusion list matters here too — not as a tenant “win,” but as a clarity tool. A clear list of what’s outside CAM (costs covered by insurance, expenses tied to other tenants’ specific build-outs, capital items above an agreed threshold) reduces the likelihood of a dispute for everyone. Ambiguity is the actual enemy, not recovery itself.

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Expense stops: a tool that works when both sides understand the baseline

An expense stop — where the landlord absorbs costs up to a baseline and the tenant covers increases above it — is a useful structure for sharing risk on a multi-year lease. It gives the landlord a predictable floor and the tenant predictable downside risk.

The key is making sure the baseline reflects a normal, stabilized year of operations. If it’s set during an unusual year — high vacancy, deferred maintenance — the structure stops working as intended for either party. A landlord who sets the base year accurately is protecting the long-term tenant relationship as much as the tenant’s budget. This is a place where getting the number right at signing prevents friction later.

Audit rights: protection for both sides

A tenant audit right is often framed as a tenant protection, but a well-structured audit right protects landlords too. It gives tenants confidence that charges are accurate, which reduces the chance of a tenant withholding payment or escalating a dispute based on suspicion rather than facts. Landlords who bill accurately — which is most landlords — have nothing to lose from a clear, reasonable audit provision with defined notice periods and scope.

What I look for is whether the provision is workable: reasonable notice, a defined scope, and a clear process if a discrepancy is found. A workable audit right is a relationship tool. An unworkable one just means the first dispute goes straight to a harder place.

There’s also a practical litigation point landlords sometimes miss. If a tenant has a real audit right and the landlord cooperates with it, most CAM disputes get resolved through that process — informally, with documentation, no lawyers involved. If a landlord resists a legitimate audit request or stonewalls on backup documentation, the tenant’s next move is often a lawsuit — and discovery in that lawsuit will require the landlord to produce the same records anyway, except now with legal fees, a damaged relationship, and a court involved. A workable audit right isn’t a concession. It’s often the cheapest way for a landlord to keep a CAM dispute out of litigation entirely.

Management fees: a legitimate cost, clearly stated

Property management is real work, and a management fee included in CAM — typically a percentage of gross revenues — compensates the landlord or their manager for that work. This is standard and appropriate. The question for both sides is simply whether the fee is disclosed, capped at a market-reasonable rate, and consistent with what similar properties charge. A landlord who is transparent about this fee from the start rarely has a problem with it later. A tenant who understands it going in can budget for it accurately.

Capital expenditures: protecting the asset, structured fairly

Major building systems — roofs, HVAC, parking lots — eventually need replacement, and that’s a legitimate cost of ownership that landlords often pass through as amortized charges over the useful life of the improvement. This protects the asset’s long-term value, which benefits the landlord’s investment and the tenant’s experience in the space (nobody wants to occupy a building with a failing roof).

The fair structuring question is about alignment: does the tenant’s share of the amortized cost roughly match the portion of the asset’s useful life they’ll actually occupy? A tenant signing a five-year lease shouldn’t necessarily fund the same share as a tenant signing fifteen years. Landlords who think through this proactively — capping pass-throughs, prorating based on lease term — sign easier deals and have fewer renewal-time arguments.

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Assignment and subletting: flexibility and protection, for both sides

Business circumstances change — for tenants and for the buildings they occupy. A tenant may need to sell their business or relocate. A landlord has a legitimate interest in who occupies their property, particularly around creditworthiness and use.

“Consent not to be unreasonably withheld” is standard, but the more useful approach for both sides is defining what reasonable means upfront: creditworthiness standards, permitted use categories, and notice requirements. This gives tenants a clear path if circumstances change, and gives landlords confidence that any assignee will meet the standards they care about. Defined criteria, agreed at signing, prevent the situation from becoming a negotiation under pressure later.

What this means practically

The rent is the easy part — one number, negotiated in the open, understood by both sides from day one. The provisions above are where the lease either works smoothly for years or generates friction that nobody wanted. None of these provisions are inherently good or bad for either side. They’re tools. The outcome depends on whether both parties understood them at signing.

The tenant from the beginning of this piece and his landlord eventually worked through their dispute — but it took a renegotiation that could have been avoided with fifteen more minutes of attention at signing. That’s true whether you’re the one drafting the lease or the one reviewing it.

Read the lease. All of it. Both sides benefit from doing so.

Before signing a lease, understand where the money actually moves. Whether you’re a landlord drafting lease language or a tenant reviewing it, I’m happy to take a look at the financial provisions.

Tell Me About Your Deal

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I’m starting this newsletter with the topic that started it all for me.

In the summer of 2000, I was a college student working what I still consider one of the best summer jobs a young person interested in real estate could land: the Perry Township Assessor’s office in Indianapolis. I spent that summer learning how assessors think, how they value property, and how the process works from the inside. It gave me a perspective on property taxes that I’ve carried into every real estate deal I’ve worked on since. Most people treat an assessment as a fixed fact. After that summer, I never could.

Tell me about your tax issue

I’ve watched owners spend three months fighting over a lease rate, then sign off on an assessment that costs them twice as much over the same period. It happens more often than you’d expect — and the reason is simple. Rent is visible. It shows up in the LOI, it comes up in every phone call, it becomes the proxy for the whole deal. Taxes sit in the background, quietly doing their work.

Here’s the math that should change how you think about this. On a $3 million commercial property, a $15,000 annual tax increase looks modest on its face. But if your cap rate is 7%, that swing in annual expenses reduces your property value by more than $200,000 on paper. A 1-point cap rate compression gets written up in trade publications. A decade of tax escalation that produces the same damage gets almost no attention.

The largest real estate investment trusts in the country understand this. They have entire floors of people — analysts, attorneys, consultants — doing nothing but managing the property tax process across their portfolios. They know that disciplined assessment management is asset management. Most individual owners treat it as paperwork.

Why assessments go unchallenged

Most owners receive the assessment notice, glance at it, and file it. The appeal window is short — in Indiana, you have until June 15 to appeal your assessment for that tax year — and the process feels opaque. Miss that date, and you’ve waived your right to challenge the number regardless of how wrong it is. The deadline is firm. It doesn’t move because you were busy.

The methodology question matters just as much as the deadline. Indiana assessors use three valuation approaches: cost, income, and sales comparison. The approach they choose can swing the outcome significantly. If your assessor valued an income-producing property using the cost approach — replacement value rather than what a buyer would actually pay based on cash flow — you may have a legitimate argument for reduction. But here’s the thing: the assessor is working without your numbers. They don’t know your actual NOI. They’re applying a methodology to limited public information. It is your job to educate them. Bring your rent rolls, your actual operating expenses, your vacancy history. Make the income approach case with real data. An assessor who sees a well-documented income analysis will work with it. One who sees nothing will work with what they have.

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What owners get wrong during the appeal

The first mistake — and it’s a costly one — is filing an appeal without first getting a rough sense of what your property is actually worth. This is not a step to skip. If you file an appeal and your property is currently under-assessed relative to market value, you can end up with an increased assessment. Appeals are not automatically protective. The process is a full review of the assessment, and it can go in either direction. Before you file anything, do the basic work: pull comparable sales, get a rough income-based valuation, and understand where you stand. If the assessment looks high relative to value, file. If it looks low, don’t.

The second mistake is treating the informal conference as the end of the process when it’s really the beginning. Indiana’s appeal ladder runs from the informal conference with your county assessor, to the Property Tax Assessment Board of Appeals, to the Indiana Board of Tax Review, and ultimately to the Indiana Tax Court. Most appeals resolve at the first or second step. But owners who accept an unsatisfying informal result without escalating leave money on the table.

The third mistake is ignoring the cumulative effect of small annual increases. A 3% assessment increase feels manageable. Five consecutive years at 3% is a 16% cumulative jump. On a property with a 7% cap rate, that compounds into a material value reduction that never showed up as a single alarming number — just a slow bleed that nobody flagged because each individual increment seemed reasonable.

A word for NNN landlords and CAM pass-through situations

If you’re a triple-net landlord, or if your leases pass property tax increases through to tenants as part of CAM, you might think this doesn’t affect you directly. It does. A successful appeal reduces the occupancy cost your tenant carries over time — and lower occupancy cost means a healthier tenant, a more competitive space, and a stronger argument for renewal when the lease comes up. Tenants who are stretched by rising CAM costs don’t renew. Tenants with manageable occupancy costs do. The appeal benefits you even when you’re not the one writing the check.

The right time to start is before the notice arrives

Indiana assessment notices typically arrive in the spring. The June 15 deadline follows. That window is enough time to review the notice, pull comparables, get a rough sense of value, and decide whether filing makes sense. The questions to ask: What approach did the assessor use? What is the implied value per square foot relative to comparable sales? Does the assessed value reflect what a real buyer would pay today?

File to preserve your rights when the case is there. Don’t file reflexively when it isn’t. And if you’re not sure, that’s exactly what a quick review is for.

Don’t treat the assessment as fixed. It’s an opening position.

Talk about your assessment

If you’d like a second set of eyes on a property tax assessment, reach out. A short review of the notice, the methodology, and your operating data is often enough to determine whether an appeal is worth pursuing.

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