Commercial Real Estate Due Diligence Checklist for BC (2026)

Due diligence is the 30-60 day window between accepting an offer and being legally committed to close. It's where most deal problems are discovered, and where most failed acquisitions could have been avoided. This checklist covers the full scope of BC commercial real estate and business acquisition due diligence, organized by category and prioritized by what most often surfaces problems.

Why due diligence matters more than negotiation

Most buyers focus on price. The reality: a great-priced acquisition with a hidden problem will destroy more value than paying 10% over asking for a clean asset. Of failed BC commercial deals from 2021-2025, roughly 70% traced back to a due diligence item that was either skipped or surfaced late and led to an expensive renegotiation. The checklist below is built from those patterns.

1. Financial due diligence

The non-negotiable items:

3 years of audited or reviewed financial statements. Plus year-to-date current year. Look for inconsistent gross margin, unexplained one-time gains, and revenue recognition patterns.
3 years of corporate tax returns. Compare net income on the financials to taxable income on the returns. Material discrepancies need explanation.
Bank statements for 12 months. Verify cash flow patterns match the income statement.
Accounts receivable aging. Anything over 90 days is suspect. Calculate likely collectability.
Accounts payable aging and supplier payment terms.
Customer concentration — top 10 customers as % of revenue, plus renewal history.
Recurring vs one-time revenue split. Recurring is worth 2-3x what one-time revenue is worth in the multiple.
Add-back schedule. The seller will normalize earnings with "owner discretionary" add-backs. Verify each one is genuinely discretionary and won't continue under your ownership.

2. Real estate and lease review

For owned property, this overlaps with traditional CRE due diligence. For leased premises (most common for small business acquisitions in Vancouver), the lease review is critical:

Remaining term and renewal options. Less than 5 years remaining (with no extension rights) is a serious problem for a business sale.
Rent escalation clauses. CPI-based, fixed step, or market reset?
Operating cost (additional rent) reconciliations for the past 3 years. Watch for sharp jumps.
Assignment and change-of-control provisions. Most commercial leases require landlord consent on assignment. Get it in writing as a closing condition.
Personal guarantee transfer or release. If the seller personally guarantees the lease, the landlord will want a new guarantee from you.
Use clause restrictions. Confirm your planned operating model fits the permitted uses.
Exclusive use rights (if any) — is the business's competitive position protected by lease language?

3. Title, zoning, and environmental (for owned property)

Title search for charges, liens, easements, and rights of way.
Survey or BC Land Title plan confirming property boundaries match what was represented.
Zoning bylaw verification from the municipality. The current use must be permitted; planned changes must be permitted or rezone-able.
Building permits and occupancy permits for all existing structures and major modifications.
Phase I Environmental Site Assessment. Required by most lenders for properties with industrial, automotive, dry cleaning, or fueling history. Phase II (subsurface testing) if Phase I flags concerns.
Property tax certificate showing current and projected assessment.

4. Employment and HR

BC's Employment Standards Act creates significant successor employer liability. A buyer who takes over a business and inherits employees inherits their accumulated entitlements:

Employee roster with hire dates, current salary, accumulated vacation, and benefits enrollment.
Employment agreements reviewed for: termination clauses, non-compete and non-solicit provisions, IP assignment.
Contractor relationships — review whether they meet CRA's employee-vs-contractor test. Misclassified contractors create successor liability.
Termination cost exposure — calculate the BC ESA termination notice or pay in lieu for every existing employee.
WorkSafeBC clearance letter showing premiums are paid up.
Outstanding payroll, vacation pay, and CPP/EI remittances.

5. Permits, licenses, and contracts

All operating licenses (municipal business license, provincial sector licenses, federal where applicable). Confirm transferability.
BC Liquor and Cannabis Regulation Branch (LCRB) license for hospitality. Transfer takes 60-90 days and requires criminal record check.
Customer contracts — review change-of-control clauses. Some contracts terminate on sale unless customer consents.
Supplier contracts and exclusivity arrangements.
Software licenses — many are non-transferable. Plan for re-licensing post-close.
Insurance policies — coverage levels and claims history for the past 5 years.

6. Equipment and inventory

Equipment list with age, condition, and remaining useful life.
Equipment financing or leases — what transfers, what doesn't.
Maintenance records for major equipment.
Inventory count at closing, with valuation methodology agreed in the APA.
Obsolete inventory identified and either excluded or written down before sale.

7. IT, IP, and data

Customer database ownership confirmed in writing.
Software stack inventory with license terms.
Domain names, social media handles, trademarks — confirm they will transfer at close.
Data privacy compliance with BC's Personal Information Protection Act (PIPA).
Cybersecurity posture review — has the business had any breaches in the past 5 years?

8. Legal and regulatory

Pending or threatened litigation. Get a written representation in the APA.
Regulatory compliance history — any complaints, fines, or open investigations.
Tax compliance — corporate income tax, GST/HST, PST (BC specific), payroll source deductions, WorkSafeBC.
Required disclosures from the seller around any known issues.

BC-specific items most buyers miss

BC PST registration and compliance. The buyer of an asset purchase becomes liable for the seller's unpaid PST without a clearance certificate from the Ministry of Finance.
WorkSafeBC successor liability. A buyer can inherit unpaid premiums; always get a clearance letter.
Corporate registry filings — confirm the seller's BC corporation is in good standing with no outstanding annual reports.
Strata bylaws and minutes for any commercial strata unit (mixed-use buildings, professional condos).
Municipal Class 6 vs Class 5 commercial property tax assessment. Misclassification can mean the buyer inherits a multi-year reassessment exposure.

Practical next steps

The right team for BC commercial due diligence is typically: a CPA (financials, tax structure), a commercial lawyer (legal, lease, employment), and a commercial realtor familiar with the asset class. Budget $15K to $40K in professional fees for a $500K to $2M deal. Reach out to our brokerage team for a referral list of CPAs and lawyers who handle this work in Vancouver.