How to Check Commercial Real Estate Before Buying

Due diligence before buying commercial property should cover more than an extract from the Unified State Register of Real Estate (EGRN). The buyer should review the property itself, its title history, the seller, encumbrances, tenants, litigation, alterations, engineering systems and the building's operating arrangements.

For an office in a business centre, additional questions arise: who owns the parking spaces, what rules the management company imposes, whether the required fit-out is permitted and whether there is enough engineering capacity for the future team.

In short, three areas should be checked before buying commercial premises:

1. The property — exactly what is being sold and whether the premises match the documents.
2. The seller — whether the seller has the right to dispose of the property and whether the transaction presents any risks.
3. Financial and operating considerations — what the office will cost after purchase and whether it can be used as the company intends.

Below is a detailed checklist for reviewing an office before a transaction.

This material is for information only. For a high-value commercial property transaction, it is advisable to have a real-estate specialist carry out the legal review of the documents and contract.

What to check before buying commercial property: a short list

If time is limited, start with these points:

• the property's EGRN details;
• the seller's registered title;
• restrictions and encumbrances;
• the basis on which title arose;
• the history of title transfers;
• the seller's authority;
• litigation;
• signs of insolvency;
• existing leases;
• the actual layout;
• whether alterations were lawfully completed;
• engineering capacity;
• outstanding debts and operating charges;
• rights to parking and ancillary premises;
• the terms of the sale and purchase agreement;
• the handover procedure.

A serious issue at any stage does not necessarily mean that the transaction must be abandoned. However, the risk should be understood before any money is paid, not after title is registered.

Why an EGRN extract alone is not enough

An extract from the Unified State Register of Real Estate is one of the key documents used to review a property.

Among other things, it can be used to verify:

• the cadastral number;
• the address;
• size;
• the property's designated use;
• registered rights;
• restrictions and encumbrances;
• certain other legally significant characteristics.

However, the EGRN does not answer every question.

For example, an extract alone will not fully reveal:

• why the seller has decided to sell urgently;
• whether the seller is in financial difficulty;
• whether there is a corporate dispute;
• whether the actual layout matches the technical documents;
• whether the engineering systems are in working order;
• the level of operating expenses the new owner will face;
• whether there are arrangements with tenants that must be taken into account.

The EGRN is therefore the starting point for due diligence, not the entire review.

1. Make sure you are reviewing the correct property

The first step may seem obvious, but this is where mistakes often begin.

Cross-check:

• the actual address;
• the cadastral number;
• size;
• the floor;
• the unit number;
• the designated use;
• the floor plan.

A transaction involving a large office may include more than one registered property.

Separate legal status may apply to:

• office premises;
• parking spaces;
• storage rooms;
• technical rooms;
• other assets included in the offer.

The statement “everything is included in the price” should therefore be supported by a list of the properties and documents.

It is essential to understand exactly what the buyer will acquire once the transaction is registered.

2. Obtain an up-to-date EGRN extract

Do not rely solely on an extract supplied by the seller several months earlier.

Rosreestr notes that the law does not set a fixed validity period for an EGRN extract. The information reflects the register as it stood when the extract was issued.

For a major transaction, it is therefore prudent to obtain current information as close as possible to the signing date.

Check the following in the extract:

Property characteristics

Cross-check:

• size;
• the cadastral number;
• the address;
• the floor;
• the premises' designated use.

If the actual office differs materially from the register, establish why.

Registered title

Make sure the seller has registered title to the property being sold.

If a representative signs the agreement, their authority must be checked separately.

Restrictions and encumbrances

Pay particular attention to information on:

• mortgages;
• asset freezes;
• restrictions on registration actions;
• leases;
• easements;
• other restrictions.

An encumbrance does not always make a transaction impossible, but the buyer should understand how it will be discharged or the consequences if it remains after title passes.

3. Check how the seller acquired the property

Identifying the current owner is not enough.

You need to understand how title arose.

The basis may be:

• a sale and purchase agreement;
• an investment agreement;
• a handover certificate;
• a court judgment;
• a corporate reorganisation;
• privatisation;
• another legal document.

Extra care is required if the property:

• changed owners several times over a short period;
• was acquired in the course of a corporate dispute;
• was sold at an unusually low price;
• was previously the subject of litigation.

The higher the property's value, the more important it is to reconstruct its transaction history as far back as necessary to assess the risk.

4. Review the title history

Frequent changes of ownership do not in themselves prove that there is a problem.

They do, however, justify further questions.

For example:

• why the property was resold quickly;
• whether the previous companies were connected;
• whether the transactions took place at market value;
• whether there was any litigation;
• whether earlier transactions involved any unusual circumstances;
• whether there was any litigation;
• whether any transactions took place shortly before one party's bankruptcy.

If the chain of title looks unusual, the property's legal history should be examined in more detail.

5. Review the selling company

If the seller is a legal entity, reviewing the property itself is only half the task.

The company must also be reviewed.

For an initial review, use the Unified State Register of Legal Entities (EGRUL) and the Federal Tax Service's Transparent Business service.

Check:

• whether the company exists;
• who the general director is;
• who the shareholders or members are;
• when the company was registered;
• whether its address matches the register;
• whether any data is marked as unreliable;
• whether the company is undergoing liquidation or reorganisation;
• who is authorised to sign documents.

For a major transaction, a lawyer will also review the seller's charter and corporate documents.

6. Verify the signatory's authority

The fact that the person is presented as the general director does not complete the review.

Establish:

• whether the person actually holds the position;
• whether they may act without a power of attorney;
• whether their authority is restricted by the charter;
• whether a resolution of the shareholders, members or board is required;
• whether the transaction is a major transaction for the seller;
• whether separate corporate approval is required.

If a representative signs under a power of attorney, check:

• the power of attorney itself;
• its validity period;
• the authority to sell the property;
• the authority to sign the agreement and handover certificate;
• any restrictions in the document.

In a high-value property transaction, a formal defect in the signatory's authority is an unnecessary risk.

7. Check the seller for insolvency risks

The owner's financial position requires separate attention.

A property sale by a company in serious financial difficulty may later be challenged.

For an initial review, use:

• Fedresurs;
• bankruptcy records;
• the Commercial Court Case File;
• financial statements;
• Federal Tax Service records;
• enforcement proceedings and other available sources, depending on the circumstances.

Take particular care where several warning signs appear together:

• substantial debt;
• numerous court proceedings;
• creditor claims;
• the sale of key assets;
• a price materially below market level;
• bankruptcy-related proceedings.

The buyer's task is not merely to establish that the company exists today, but to identify circumstances that could later call the transaction into question.

8. Review litigation

Searching for the seller in the Commercial Court Case File helps reveal the nature of the company's litigation.

The mere existence of court proceedings is not conclusive. For a large company, multiple cases may be a normal part of business.

The subject matter of each dispute is what matters.

Pay particular attention to:

• property-related cases;
• claims seeking recognition of title;
• disputes between the company's shareholders or members;
• claims for substantial debts;
• bankruptcy cases;
• interim measures;
• challenges to previous transactions.

If the office being acquired, or a related right, features in litigation, the transaction requires especially careful analysis.

9. Find out whether there are existing tenants

Commercial property may be sold subject to existing leases.

Request information on every agreement relating to the premises.

You need to understand:

• who occupies the office;
• the term of the agreement;
• whether the lease is registered, where required;
• whether early termination is permitted;
• whether a security deposit is held;
• whether any amounts are outstanding;
• who owns the furniture and equipment;
• which obligations pass to the new owner.

This is particularly important if a company is buying the office for its own use.

An existing tenant may mean that the buyer cannot occupy the premises immediately after completion.

For an investment buyer, the position is different: a reliable sitting tenant may be an advantage, but the lease economics must be reviewed separately.

10. Compare the documents with the actual layout

Premises with a clear legal history may still have technical problems.

Obtain an up-to-date plan and compare it with the office as built.

Check:

• the position of partitions;
• toilets;
• entrances;
• internal staircases;
• combined units;
• engineering areas;
• openings;
• the floor configuration.

If the actual condition differs, establish:

1. What work was carried out.
2. Whether approval was required.
3. Whether the alterations were documented.
4. Who will be responsible for remedying any discrepancies.

Premises that have undergone major refurbishment or a complex fit-out require particular scrutiny.

Our article explains in detail what work is involved in the comprehensive preparation of a space: “Office fit-out: what it is, stages, timeframes and cost”.

11. Carry out a technical audit of the office

A lawyer checks legal rights, but cannot determine whether the office has enough ventilation for the intended team.

For a large property, legal due diligence should preferably be supplemented by a technical audit.

Power supply

Confirm:

• available electrical capacity;
• the actual load;
• spare capacity;
• whether capacity can be increased;
• the condition of distribution boards.

This is especially important for:

• server rooms;
• financial companies;
• technology teams;
• multimedia spaces;
• densely occupied offices.

Ventilation and air conditioning

Check:

• the designed air-exchange rate;
• the number of climate zones;
• equipment condition;
• the ability to control zones individually;
• management-company restrictions.

An empty office may feel comfortable during a viewing but perform very differently once the team moves in.

Low-voltage systems

Assess:

• internet connectivity;
• available service providers;
• structured cabling;
• access control;
• CCTV;
• fire-protection systems.

Physical condition

Inspect:

• floors;
• ceilings;
• façade junctions;
• windows;
• doors;
• plumbing;
• signs of leaks;
• condition of the fit-out;
• noise from engineering systems.

The cost of remedying identified defects should be included in the financial model before the transaction.

12. Review the management company's terms

An office buyer acquires the premises but remains dependent on the building in which they are located.

Before the transaction, request:

• the operating rules;
• the amount of recurring charges;
• the indexation procedure;
• a list of included services;
• fit-out rules;
• contractor requirements;
• delivery arrangements;
• the procedure for using service lifts;
• access-control rules;
• conditions for holding events.

Find out separately whether any amounts are owed to the management company in respect of the premises and what obligations the new owner will assume.

We explain the structure of recurring charges in detail in “Office operating expenses: what OPEX includes”.

13. Review parking separately

The phrase “parking comes with the office” is too vague for a high-value transaction.

Establish:

• how many parking spaces are included in the offer;
• how the rights to them are documented;
• whether they are included in the price;
• whether they are specified in the agreement;
• whether they may be transferred separately;
• whether operating charges apply;
• how access is arranged.

If parking spaces form part of the commercial offer, they should be reviewed as carefully as the main office.

For example, when acquiring office penthouse F-375 the offer includes 15 parking spaces. Their inclusion and legal status should be reviewed together with the main property.

14. Calculate the total cost of ownership

A legally sound transaction may still be economically unattractive.

In addition to the purchase price, consider:

• operating charges;
• utility costs;
• Parking;
• tax exposure;
• insurance cover;
• technical maintenance;
• future fit-out or refurbishment;
• furniture;
• fit-out;
• engineering-system upgrades.

When comparing two offices, a modest difference in purchase price may matter less than future refurbishment costs.

If the company has not yet decided whether to buy or lease, it is useful first to compare buying and leasing an office in Moscow City.

15. Compare the price with the market

An excessively high price is a financial risk.

An unusually low price is a reason to ask further questions.

A material departure from comparable properties may reflect:

• an urgent sale;
• technical problems;
• an encumbrance;
• particular lease terms;
• the seller's corporate circumstances;
• the need for major refurbishment.

Price alone does not prove that there is a problem. However, the buyer should understand the reason for a material discount and how it fits the overall transaction.

16. Check the premises' designated use

Make sure the premises' legal status is consistent with the intended use.

For a corporate office, the following are particularly important:

• non-residential status;
• the ability to use the premises as an office in practice;
• the absence of restrictions that would impede the company's operations;
• compliance with building requirements.

Adjacent premises in a mixed-use complex may have different legal status.

The designated use of a particular property cannot therefore be inferred merely from its location in a well-known office tower.

17. Check whether future alterations are feasible

Even if the current office is legally and technically sound, it may not suit the future owner.

It is advisable to prepare a test layout before buying.

Map out:

• workstations;
• private offices;
• meeting rooms;
• reception;
• the server room;
• a kitchen;
• breakout areas;
• executive rooms.

A technical specialist should then determine whether the proposed layout can be implemented.

The property can be assessed before the transaction using the process in our guide “How to Choose an Office in Moscow City”.

18. What to check in the sale and purchase agreement

The agreement should not be treated as a formality once the property review is complete.

At a minimum, the document should clearly identify:

• the parties;
• the property being sold;
• the cadastral details;
• the cost;
• the payment arrangements;
• the programme;
• the handover procedure;
• the set of documents to be provided;
• the parties' liability.

Seller representations are also important in a complex commercial transaction.

For example, the parties may record statements that:

• the seller has the necessary authority;
• the property is not subject to any dispute undisclosed to the buyer;
• there are no undisclosed third-party rights;
• the buyer has received complete information about relevant agreements;
• the documents provided are accurate.

The exact terms depend on the transaction structure and should be reviewed by a lawyer.

19. The handover certificate is more than a final signature

Inspect the property again before signing the handover certificate.

Record:

• condition of the fit-out;
• equipment;
• the furniture, if included in the transaction;
• keys and access cards;
• meter readings;
• identified defects;
• the documents handed over.

If time passes between signing the agreement and physical handover, the condition of the premises may change.

The certificate is therefore the final control point.

What to check specifically when buying an office in Moscow City

A high-rise office in a mixed-use complex has additional considerations.

In addition to standard legal due diligence, review:

Lift logistics

Confirm which lift bank serves the floor and how access is arranged for staff and visitors.

Engineering restrictions

A high-rise building has centralised systems, and not every alteration can be carried out independently within the office.

The management company

Obtain the technical requirements and operating rules before developing the proposed design.

Fit-out and refurbishment

Check what work is permitted and how approvals are obtained.

Parking

Do not treat parking spaces as part of the transaction until the documents confirm this.

The full operating cost

A premium office should be compared not only by price per square metre, but also by its ongoing operating costs.

The broader transaction process is explained in our guide “How to buy an office in Moscow City”.

Red flags before buying commercial property

A single sign does not necessarily mean that the transaction is problematic. A combination of circumstances should raise concern.

Frequent changes of ownership

The reasons for the title transfers should be investigated.

An urgent sale at a substantial discount

The commercial reason for the discount should be clear.

The seller refuses to provide documents

A serious warning sign, however attractive the price.

The actual layout does not match the documents

The legal status of the alterations must be established before the transaction.

The seller is involved in significant litigation

Especially where the disputes concern property, creditors or bankruptcy.

An encumbrance promised to be removed “after completion”

The mechanism for removing the restriction should be legally clear and controllable.

Unclear parking status

Verbal assurances about parking spaces are no substitute for documents.

Unexpectedly high OPEX

It may materially change the economics of ownership.

Insufficient engineering capacity

Such a problem may be much harder to resolve after purchase than before it.

How to review commercial property before purchase: a step-by-step process

Step 1. Identify the property

Obtain the cadastral numbers and a complete list of everything included in the offer.

Step 2. Obtain current EGRN information

Check the characteristics, rights and restrictions.

Step 3. Review the basis of the seller's title

Obtain the documents under which the current owner holds title.

Step 4. Review the seller

Review the EGRUL records, management, shareholders or members, and financial warning signs.

Step 5. Review litigation and bankruptcy risks

Check the Commercial Court Case File and Fedresurs.

Step 6. Review agreements relating to the property

Start with leases and other third-party rights.

Step 7. Compare the plan with the actual premises

Identify any unapproved alterations.

Step 8. Carry out a technical audit

Review the engineering systems, capacity and physical condition of the office.

Step 9. Calculate the full cost

Include OPEX, parking, fit-out and other future costs.

Step 10. Review the agreement and handover

Record the property, price, payment arrangements, party representations and condition of the premises.

What to check yourself and what to leave to specialists

The buyer can collect some initial information independently:

• property information;
• public company data;
• court cases;
• general information about the business centre;
• operating arrangements.

For a major transaction, however, it is prudent to divide responsibilities.

A lawyer reviews:

• title of ownership;
• the history;
• restrictions;
• the seller;
• corporate approvals;
• the agreement.

A technical specialist reviews:

• the actual condition;
• engineering capacity;
• any unauthorized layout changes;
• constraints on the future fit-out.

A financial specialist assesses:

• the price;
• costs;
• the tax model;
• ownership scenarios.

The more valuable the office, the less convincing the argument for saving money on due diligence.

In brief: how to buy commercial property more safely

Before buying commercial premises, more than title alone must be checked.

A comprehensive review covers:

• the EGRN;
• the property's history;
• the seller;
• bankruptcy risks and litigation;
• the tenants;
• technical condition;
• the layout;
• the management company;
• Parking;
• operating expenses;
• the agreement.

For a high-value corporate office, legal and technical due diligence should proceed in parallel.

This allows the buyer to understand not only whether the property can legally be acquired, but also whether the company will be able to use it as intended after purchase.

If a company is considering buying its own headquarters in Federation Tower, details of the three-level office penthouse F-375 can be found on the main project page.

Frequently Asked Questions

Which documents should be checked before buying commercial property?

Start with the EGRN information, title documents, seller information, existing encumbrances and agreements relating to the property. The list may be considerably longer for a particular transaction.

How do you check the owner of commercial premises?

Start with the EGRN information and the seller's documents. If the owner is a legal entity, also check its EGRUL records, the director's authority and corporate documents.

How recent should an EGRN extract be?

The law does not set a universal validity period. Since an extract reflects the register when it was issued, it is advisable to obtain the most up-to-date document available before a major transaction.

How do you check commercial property for encumbrances?

Registered restrictions and encumbrances are checked in the EGRN. A lawyer will also review the property documents, agreements and litigation.

How do you review the selling company?

For an initial review, use the EGRUL, the Federal Tax Service's Transparent Business service, Fedresurs and the Commercial Court Case File. Corporate documents and financial condition should also be examined for a major transaction.

Do alterations to commercial premises need to be checked?

Yes. The office as built should be compared with the technical and registration documents. Any discrepancies must be assessed before the transaction.

What should be checked when buying an office in a business centre?

In addition to the premises' legal status, check the management company, operating expenses, engineering capacity, fit-out rules, access, parking and terms for using shared building systems.

Does legal due diligence provide a 100% guarantee?

No. Due diligence aims to identify material risks, assess their likelihood and give the buyer a basis for making a decision. A high-value transaction should be reviewed comprehensively by relevant specialists.