Commercial Property Inspection Secrets for Property Managers

Commercial property managers have to inspect commercial property frequently to ensure that the tenants are correctly occupying the premises, and that the property still performs well for the landlord. Failure to inspect a property leads to problems with tenants and property function.

As a commercial property manager you should have a structured inspection process that details the property issues needing to be monitored. A structured inspection process helps you focus on the specific elements in the property that impact rent, function, and tenant occupancy.

As to how long a property inspection takes, and how frequently you should inspect the property, really does depend on these three things:

How the property is used by the tenants and what pressure this creates on the property.
The type of visitors to the property and frequency of usage.
The fees that are being paid for the property management services by the landlord.

In absolutely all cases, a property inspection process should be documented for future reference and or evidence in any claim or concern. In commercial property, the matter of proof and evidence is critical to the future legal activities under any lease arrangement or dispute with occupancy provisions.

It is very common for retail property to be inspected more frequently than office or industrial property. This is mainly due to the interaction of the customer in the property, and the large numbers of people visiting the property each day.

The inspection process for a commercial or retail building is always unique and specific to its location and structure; however the following is a good model to use when inspecting commercial buildings under property management.

Start with the exterior of the property, looking at the points of access and egress to the front of the property and around the property.

Look for presentational issues associated with signage, access, and building appearance.

Security around the building and the property itself should be examined for effectiveness and practicality. Look for areas that have been tampered with or areas that are potentially sources of future problems.

Examine the points of entry for the tenants to the property. Are the access points of a quality that supports the property profile and rental? Are the access points safe?

Understand the storage of vehicles on the property and car park operations in and around the property. Are the car park operations functional, well lit, and secure?

Look at lighting around the property and its suitability for after-hours security and property usage.

Examine the exterior of the building for obvious maintenance issues and malfunctions.

Look at the entrance points to the building for compliance to current building codes as they apply in your area and with the building of its type.

Examine the safety exits and evacuation points to ensure they are in compliance with safety standards and building codes.

Look at common areas such as corridors, stairs, tea rooms, toilets, and other services and amenities used by the tenants.

Examine the entrance doorways and frontages to the tenancies for compliance to lease documentation including the current plans and drawings that apply to the building.

Move through the tenancy space (subject to lease authorized access) looking for signs of damage or unauthorized tenant usage.

Plant and machinery associated with the building and owned by the landlord should be inspected by qualified contractors that understand the practicality and function of the machinery. Written reports should be obtained on a monthly basis on all maintenance matters.

The tenant should be interviewed regularly to understand any difficulties or concerns that they may have with the building. You are also looking for changes of occupancy or space need with each and every tenant such as expansion or contraction of space.

The above list is a basic summary of the commercial property inspection process. Given that every property is unique, it is best to create your own inspection checklist to use when inspecting the different property types of office, industrial, and retail property.

Your region and location will also present certain other aspects of occupancy and concerns to be monitored. A good example here is environmental, heritage, or cultural issues. When you inspect commercial property, do so with a view to building safety, usage, and investment performance.

Purchasing A Property In NSW – The Contract For Sale Document

The Contract For Sale

Buying a property in NSW is quite complicated and the basis of every land purchase is the Contract For Sale.

The NSW law is such that a transfer of land must be evidenced in writing which means that land cannot be bought or sold by way of verbal agreement. There must be a written agreement.

Also, before being able to advertise and market a residential property for Sale a complete Contract For Sale is required. This rule applies even if you are selling the property privately, without a real estate agent.

If you are considering the purchase of a residential property make sure you ask for a copy of the Contract For Sale as it will provide you with a lot of information in relation to the property.

The definition of ‘residential property’ is set out in Section 66Q of the Conveyancing Act 1919 as land on which are situated (or in the course of construction) not more than 2 places of residence, and no other improvements, or

2. vacant land on which the construction of a single place of residence alone is not prohibited by law, or

3. a lot or lots (including a proposed lot or lots) under the Strata Schemes Freehold Development Act

1973 or the Strata Schemes (Leasehold) Development Act 1986, comprising not more than one place of residence alone, whether constructed or in the course of construction, and including any place used or designed for use for a purpose ancillary to the place of residence.

Residential property does not however include:

(a) land or a lot that is used wholly for non-residential purposes, or

(b) land that is more than 2.5 hectares in area (or such other area as may be prescribed).

This means that:

a property over 2.5 hectares in size,

a property with more than two residences on it, or

a commercial property

can be advertised and marketed without a Contract For Sale.

With non-residential property you may not actually get to see the Contract until all the terms are agreed.

In this Article I will set out some tips on what to look for in the NSW Contract For Sale (based on the Law Society 2005 Edition version), which is most commonly used.

What Is In The Contract of Sale?

The Front Page

The Front Page will set out some very important particulars such as:

Who the Real Estate Agent is, if there is one?

It is important to check that the Real Estate Agent selling you the Property is the one named on the front page, or a special condition in the Contract may make you liable to pay Commission to the Agent on the Front Page.

This could be very costly

Who the Seller and their Solicitor is?

Check that the Seller’s details are exactly the same as the details set out in the First Schedule of the Title Search, which will be contained in the Contract For Sale.

The Completion Date

This tells you how long you have from signing the Contract and paying the Deposit until you have to pay the balance of the purchase price.

Make sure that this period is realistic as a special condition in the Contract will make you liable to pay penalties and interest if you do not Settle (complete the Contract) on the Completion date.

The address of the Property and what its legal title reference is.

Check that the Title Search and other documents in the Contract all have the same title reference numbers on them and relate to the Property that you are buying.

Whether the Property will be vacant or have a Tenant in it at Settlement?

Be careful that you are happy to have a Tenant in the Property at Settlement if the “Subject to existing tenancies’ box is ticked as this means that the Tenancy will pass to you.

If you do not want to have the Tenant in the property at the time of Settlement make sure you tick the ‘vacant possession’ box before signing the Contract.


Make sure that the box for each Improvement contained in the purchase is ticked or you may not get the Improvement at Settlement.


Make sure that the box for each Inclusion contained in the purchase is ticked as if it is not there is no obligation on the Seller to leave the item at Settlement.


Make sure that there are no Exclusions that you are not aware of.

The Purchaser’s details and his/her Solicitor if they have one will be shown.

If you are buying the Property with someone else in unequal shares make sure that the different shares are shown here.

The Price, Deposit and balance to be paid at Settlement will be shown.

If you are not paying 10% of the Purchase Price as the Deposit make sure that this is clearly stated here, or you will be in breach of the Contract if you do not pay the full 10%.

Signatures and Exchange of Contracts

The Purchaser will sign one copy of the Contract and the Seller will sign another copy of the Contract.

The Contracts are then Exchanged and the Seller (or his/her Solicitor) gets the copy signed by the Purchaser and the Purchaser (or his/her Solicitor) gets the copy signed by the Seller.

If there is a “Cooling Off” period (ie. a period (usually 5 business days) during which the Purchaser can change his/her mind and only lose 0.25% of the purchase price this will start to run from the date of Exchange).

Tenancy – Joint Tenants / Tenants In Common, Tenants in Unequal Shares

If you are purchasing the Property with someone else make sure you consider what is to happen to share of the Property upon your death. This is affected by the Tenancy arrangements under which you purchase.

Put simply:

If you will own the Property in equal shares with another party and want the other party to automatically get your share of the Property should you die, tick the ‘Joint Tenants’ box. This means that your share of the Property will go to the other owner regardless of what your Will might say;

2. If you will own the Property in equal shares with another party but do not want the other party to automatically get your share of the Property should you die, tick the ‘Tenants In Common’ box. This means that your share of the Property will be distributed in accordance with your Will and will not automatically go to the other owner;

3. If you will not own the Property in equal shares with another party tick the ‘In unequal shares’ box and make sure that you reflect the different shares where you write the Purchasers name eg. John Smith in a 60/100 share and Jane Smith in a 40/100 share.

Land Tax Check whether the Land Tax box is marked “yes”.

If it is you will have to contribute towards any Land Tax payable by the Vendor for the Property for that year.

The Land Tax year runs from 1 January to 31 December.

GST Check whether the Taxable Supply Box is marked

If it is make sure the GST is included in the Purchase Price and that you do not have to pay an additional 10%.

Page 2 of Contract

This Page will:

give you details of the Strata Manager if the Property is a Strata Property; and

List all the documents included in the Contract

Documents That Will Be Included In The Contract

The following Documents will be included in the Contract:

Standard Contract Pages 1-12

Special Conditions

Read these carefully as they often amend the Clauses in the Standard Pages

Title Search

This shows you:

Who owns the Property;

Whether there are any affectations eg. Easements, Restrictions on Use, Covenants, Rights of Way

Copies of the affectations eg. Easements, Restrictions on Use, Covenants, Rights of Way shown on the Title Search

A Deposited Plan which shows the location of this Property in relation to the surrounding properties;

A Certificate under Section 149 of the Environmental Planning and Assessment Act 1979, from Council, which shows the zoning of the land and information relating to the land such as road widening, heritage listing, flood affectation.

This is important as it may affect your building plans.

A Drainage Diagram from the Water Authority or Council which shows where the sewer runs in relation to the Property.

A copy of the Residential Tenancy Agreement if the Property is leased.

A copy of the Home Building Warranty Insurance for the Property if the home or any renovations are under 6 years old.

Purpose of Contract

You will be able to obtain a lot of information in relation to the Property by reading the Contract.

It will set out exactly what you are buying and give a lot of information in relation to what development you can undertake on the Property.

Exchange of Contracts

The time that Contracts are Exchange is of paramount importance in the purchase process as regardless of the verbal negotiations that have taken place neither party (ie. buyer or seller) is legally bound to proceed until signed copies of the Contract are Exchanged.

The buyers of residential property often have a Cooling-off period of 5 working days after Exchange of contracts during which they can change their mind withdraw from the sale. They will, however, forfeit the 0.25% Deposit that they paid at the time Contracts were Exchanged.

If the Contract does not allow for a Cooling off period a Notice under Section 66W of the Conveyancing Act 1919 will be required to be prepared by a Solicitor indicating that the Buyer knows that there is no Cooling-off and that he/she will be bound as soon as they sign the Contract and pay the agreed Deposit (usually 10% of the Purchase Price).

There is never a Cooling-off period when Properties are purchased at Auction.

Peter S Watson is the managing director of Platinum Homes (Sydney).

He has over 20 years experience in the building industry, including national project management experience gained in a major multi-national organisation. In addition to his builder’s licence he holds urban pest management and rigging certifications.

He also holds a business degree and has substantial financial experience which ensures that he has a sound appreciation of the time and budgetary decisions of his clients.

Peter is passionate about delivering homes that are ‘beyond the imagination’ of his clients and the vision for Platinum Homes is for it to be extraordinary. Peter sees every Platinum Home enduring into the future and being a testament for generations to come of what can be achieved through partnerships where each party truly wants the best for the other.

Property Investment Checklist

If you want to make a successful and highly profitable real estate investment, there are some key factors that you should consider before choosing an investment property. We have compiled this Property Investment Checklist to provide you with a short but essential summary of key factors you should pay attention to.

1. Have you chosen a reliable and professional property investment agency? If you are investing through a property investment company or property agents, you will have to make sure that you can fully trust them. Check the company’s track record, ask to see client testimonials, and try to contact former clients. Ensuring that you are using the right property investment company will give you peace of mind and is essential for a successful property investment.

2. Do you understand the basics of property investment and current market conditions? While you should use professionals, solicitors, or real estate agents during the investment process, you cannot entirely rely on them. Make sure that you understand the basics of property investment and all financial details involved. This will enable you to spot any potential risks ahead of time and to find a profitable investment opportunity and a good location.

3. Do you have a clear picture of what type of investment property to buy? There are a variety of investment properties, such as buy to let properties, BMV properties, off-plan properties or overseas properties. The type of real estate will also determine your investment strategy, so make sure that you know what kind of property and investment strategy you are looking for to achieve your desired profits.

4. Is the property in good condition and is it in a good location? These should be crucial considerations, as you will either want to let the property, or sell it to another property investor or home-buyer. A property that is in good condition might be more expensive, but buying a relatively cheap property in a bad condition will always incur significant additional repair costs. Whether you want to find tenants, or resell the property, the location will be crucial, and a property in a bad neighbourhood or in an economically unstable location will rarely turn out to be a good investment.

5. Will you find tenants for your property? When investing in a buy to let rental property, the tenants will form the basis of your investment bringing you profit, so it is essential to make sure that you can find tenants for your property. This will depend on the location, property condition, the rent, and many other factors. Some property investment companies will even help place tenants in the investment property.

6. Do you understand how to maximise your returns? Achieving a positive cash flow will make your property investment successful. While it is obvious that every investor wants to maximise returns, you will have to understand how to make this happen. Finding a property possibly below market value but in a good location and good condition will be crucial for the success of your investment. You will also have to understand how to minimise the costs, including repairs, and taxes, and you should also make sure that the property remains let for most of the year.

7. Do you understand the risks? Property investment will never be without its risks, and you will thus need to understand all the risks involved. Economic growth might not be as expected, or you might not find tenants for a longer period. By understanding these risks, and developing an effective risk-mitigation strategy, you will find it easier to turn your property into a successful investment.