Avoiding Property Inspections: An Expensive Mistake

During the last 3 years, I have worked on the acquisition of a number of businesses and reviewed various leases for my clients. Unfortunately, one piece of advice which I always give my clients is too often ignored: hire a commercial building inspector inspection to check out the space being leased and/or the condition of equipment vital to the operation of the business. These are just a few examples of how costly expenditures can be avoided.

Example 1: Client is leasing a space that was formerly occupied. The client decided to avoid the cost of inspecting the mechanical systems, which would have been less than $1,200. A year later, the HVAC condenser broke down. The $20,000 cost of replacing what was an obviously poorly maintained unit could have been easily spotted by a competent commercial inspector.

Example 2. Client buys an existing business. Client decides to avoid an expense of less than $1,000 to inspect equipment purchased as a part of the business. Equipment valued at $10,000 proves to be unreliable within months of the purchase. A simple test would have disclosed the condition.

Example 3. Client hires a commercial building inspector at a cost of $1,200 to check out the HVAC system as part of the due diligence. Inspection shows that the system is on its last legs and will cost $30,000 to replace. When the landlord refuses to replace the failing unit, client is able to terminate the lease under the due diligence condition which I included in the lease.