NNN Property Diligence — Everything Beyond the Lease

Companion to the lease-document checklist: everything physical, legal, and locational that diligence must clear before the earnest money hardens. Ordered by kill-potential.

Title and survey

The commitment’s Schedule B is a reading assignment, not an exhibit: easements crossing the drive-thru lane, reciprocal agreements binding the pad to a shopping center’s rules, use restrictions from a prior grocer’s exclusive. The ALTA survey overlays reality onto promises — encroachments, access points versus recorded rights, parking counts versus lease requirements. Outparcels deserve special attention to REA documents: your “freestanding” pad may share drainage, signage rights, and maintenance obligations with a center you don’t control.

Environmental

Phase I always; Phase II where history indicates. Fuel sites carry the obvious program (tanks, compliance records, state-fund eligibility), but the quiet offenders are historical: the dry cleaner that predated the dollar store, the auto shop under the QSR pad. Environmental surprises are the rare diligence item that can outrun your basis entirely — this is the corner never to cut on price or schedule.

Physical systems

Even on absolute-net paper, inspect as the eventual inheritor: roof (core samples and warranty transferability on anything past year 10), HVAC age against replacement cycles, slab and structure, ADA exposure that surfaces at re-tenanting. On NN allocations, this inspection is the price negotiation.

Zoning and entitlements

A letter confirming conforming use, parking compliance, and rebuild rights after casualty (“legal nonconforming” status can mean a burned building can’t return). Drive-thru permissions especially — the lane your value assumes may be a grandfathered privilege that dies with alteration.

The market layer

Traffic counts and access changes (DOT project maps), competitor development within the trade area, and the corridor’s trajectory — the state and tenant pages’ underwriting applied to one address. Physical diligence tells you what you’re buying; market diligence tells you what it’ll be worth when the lease someday asks the question.