Fire- and Flood-Damaged Commercial Property Due Diligence in Alberta

1. Define the acquisition perimeter and intended use

Identify every title, structure, unit, leasehold interest, fixture, equipment item, damaged area and excluded asset. State the buyer's intended use, occupancy, restoration standard, capital source and decision date.

An as-is purchase does not make an unsafe area accessible or an intended use approvable. Build conditions around the actual property interest and project rather than a generic damaged-building label.

• Purchased interest
• Loss event
• Current access
• Intended use
• Restoration scenario
• Decision authority

2. Control entry and inspection safety

Obtain written access authority and site rules from the owner and relevant authority. Coordinate structural, electrical, air-quality, hazardous-material, utility and occupational-safety controls before consultants, lenders or contractors enter.

A seller escort, insurer visit or open door is not evidence that the building is safe. Preserve an accessible alternative—records, remote imagery and qualified summaries—when physical entry is restricted.

3. Reconstruct the event without assuming causation

Review incident, fire, police, utility, weather, alarm, sprinkler, tenant and maintenance records together with photographs and professional reports. Record which investigations are preliminary, final, privileged, unavailable or limited in scope.

A stated origin, visible burn pattern, flood map or insurer response does not establish every cause or responsibility. Use qualified experts and counsel for causation, liability and evidence reliance.

4. Inspect every affected building system

Scope structure, foundations, envelope, roofing, fire separations, mechanical, electrical, plumbing, elevators, sprinklers, alarms, controls, equipment and site infrastructure. Include smoke, soot, heat, corrosion, water migration, freeze, mould and hidden-cavity questions where relevant.

A cosmetic repair scope can omit concealed damage. Conversely, an insurer's replacement scope is not a buyer's complete building-condition assessment or future-use design.

5. Test environmental and hazardous-material consequences

Review pre-loss environmental history and the event's possible effects on soil, groundwater, drains, sumps, tanks, stored chemicals, firefighting water, debris and hazardous building materials. Confirm reporting, sampling, disposal and remediation records with qualified professionals.

Cleanup invoices, odour removal or an empty public-record search do not prove regulatory closure or eliminate liability. Preserve report reliance, parcel coverage, standards, limitations and unresolved recommendations.

6. Verify permits, orders, inspections and occupancy

Order available development, building, trade, fire, demolition and occupancy records; unsafe-condition notices; orders; professional reports; permit applications; inspections and outstanding deficiencies. Confirm the current authority having jurisdiction.

An historic occupancy record does not authorize re-entry or the buyer's future use after a loss. Permit issuance, inspection, occupancy permission and business licensing are separate evidence points.

7. Audit insurance and claim boundaries

Identify the insured, claimant, adjuster, policy periods, covered property, open and disputed amounts, deductibles, advances, proof-of-loss status, salvage, subrogation, lender rights and proposed assignment or retention of proceeds. Have counsel and licensed insurance professionals determine what can transfer.

Do not include expected insurance proceeds in the acquisition model unless the operative agreement and claim evidence support the buyer's right and amount. A claim number is not a transferable asset or guaranteed recovery.

8. Reconcile leases, income and operating continuity

Review lease casualty clauses, rent abatements, restoration periods, termination rights, tenant insurance, relocation, access, claims, defaults and current possession. Rebuild actual post-loss income and expense separately from pre-loss statements.

Pre-loss NOI is not current NOI, and business-interruption or rental-income proceeds are not recurring property income. Lender underwriting should use evidence consistent with the chosen restoration and lease scenario.

9. Build coverage-adjusted cost and schedule scenarios

Obtain qualified scopes for stabilization, investigation, demolition, remediation, design, code work, reconstruction, tenant improvements, commissioning, permits, financing, carry, taxes, insurance, contingency and lease-up. State estimate class, date, exclusions and escalation.

A purchase discount does not prove an adequate contingency. Compare as-is land and improvements, repaired asset, alternative use and demolition scenarios without double-counting insurance, salvage or seller work.

10. Tie waiver and closing to actual evidence

Set conditions for access, reports, environment, title, leases, insurance, permits, financing, valuation, cost, authority and counsel-approved closing treatment. Reconfirm site condition, open work, notices and claim status immediately before waiver and possession.

Commercially can source opportunities, coordinate brokerage diligence and maintain the decision record. It does not certify safety, cause, coverage, remediation, code, permit status, restoration cost, value or future use and does not provide insurance, environmental, engineering, lending or legal advice.