Technical Due Diligence

What is Technical Due Diligence?

Technical due diligence surveys (TDD’s) (sometimes referred to as pre-acquisition surveys) are most commonly produced as part of a prospection purchaser’s pre-acquisition due diligence process when they are looking to acquire a commercial building.

They are also often produced on behalf of potential tenants prior to leasehold occupation; these are called pre-leasehold acquisition surveys. Although less common, sometimes there is a requirement for the seller of the commercial building to produce a report on their behalf which can then be provided to the prospective purchasers, these are called vendor surveys.

Technical due diligence surveys of commercial buildings should be undertaken as early on as possible within the acquisition process to enable due consideration to be given to its contents and the associated implications, however more often than not the survey and report process is one of the final elements of the pre-acquisition process and therefore can be a instructed with short time constraints.

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Technical Due Diligence Surveys

A technical due diligence survey report provides a holistic overview of a building. The report will provide a description of the commercial building(s) inclusive of the construction of the various components of the building, the building layout, its use etc. The report will also provide a detailed overview of the condition of each of the main building elements, providing recommendations for short, medium and long term repairs. Included within the report will be budget costs for the remedial and refurbishment works identified.

The technical due diligence survey report will also summarise any legal issues, which could include issues with the Title, likely dilapidations liability of existing tenants, rights of way, statutory consents etc. Further commentary will be provided in relation to how the commercial building complies with current regulations including energy performance, disability access, and health and safety regulations.

The report will also provide recommendation for further investigations, such as intrusive inspections of cladding, CCTV surveys of underground drainage or surveys by specialists such as structural engineers.

In conjunction with the above, a report is often produced by a mechanical and electrical consultant, which provides a similar level of content, although specifically relates to the mechanical and electrical service installations.

Other consultants may be engaged to provide specialist advice. Environmental; consultants are often appointed to advise on the environmental risk of the site, more commonly used when the commercial building is located on a site which had historic uses. Other consultants who are regularly engaged are structural engineers and cladding consultants.

Technical Due Diligence – Why is it important?

First and foremost a technical due diligence survey report provides the client with a summary of all parts of the property, including the condition and associated costs. This enables the client to understand their likely future liability in relation to the commercial building which will enable them to conclude whether they wish to proceed with the purchase, or lease.

Vendor surveys provide a similar level of information and enable prospective purchasers to understand the likely liabilities before progressing further with a purchaser which enables the vendor to disregard purchasers who may not be interested in the asset owing to the issues arising.

A reputable commercial building surveying company will hold professional indemnity insurance. By engaging a professional surveying company it will enable the client to rely on the contents of the report. Should any issues arise that were not contained in the report, which should have been identified by a reasonably minded survey, a client has suitable recourse to try and seek to recover any loss.