Commercial leasing is risky business but ensuring you choose the right tenant, at the outset, can dramatically decrease the risk.
To ensure that you select the right tenant, you want to be sure to conduct a thorough background check. Not only will this help you determine financial stability, it will help you determine overall character, which can signal whether the future tenant will care for your property and maintain your building's positive image.
Below is a list of information you should review before having a prospective tenant sign a lease. This will help you verify their financial status, character, and ability to fulfill obligations while helping you reduce risk and increase the value of your property investment.
Due Diligence Checklist for Commercial Leases
Professional Background
Corporations
- Full Legal Name
- Legal Corporate Status - Are they in good standing with Companies Branch and Tax Branch?
- Existence of Default Notices, Cancellations and/or Dissolutions
- Name Changes
- Operating Names
- Date of Incorporation
- Registered Head Office Addresses
- Officer, Director and Shareholder Particulars
Sole Proprietorships / Partnerships
- Business Name
- Start Date
- Status
- Address for Business Operations
Individuals or Guarantors
- AKAs
- Current Address
- Date of Birth
- Liabilities
- Repayment History
- Late Payments, Collections and Legal Actions
- Bankruptcy / Consumer Proposal
- Ownership in Rental Property
Professional Accreditations and Credentials
- Confirmation of Registration
- Status
- Date of Registration
- Existence of Disciplinary Actions, Suits, Complaints and other significant details
References
Financial Institutions / Banks
- Date Account Opened
- Deposit Account Balances
- Mortgages
- Loans and Lines of Credit
- NSF History
Landlords
- Lease Type
- Amount of Space
- Length of Lease
- Payment Amounts
- Payment History
- State of Rental Property Throughout Lease
Suppliers and Other Trade References
- Account Balances
- Credit Limits
- Payment Terms
- Payment History
Financial Profile
- Historical Payment Trends
- Payment Experience
- Credit Card Balances and Repayment History
- Loan Balances and Repayment History
- Bankruptcy, Receiverships or CCAA Filing
Judgments, Legal Actions and Collections
- History of Collection Actions
- Pending Legal Actions
- Judgments Obtained Against the Prospective Tenant
- Existence of Ta Liens, Writs, Land Charges, Crown Charges, and or Statuary Claims
- History of Bankruptcy, Consumer / Commercial Proposals, Debt Consolidation Orders, Receiverships and or CCAA Filings
- Particulars of The Subject Cases
At QCR, we make it our mission to provide easy to read reports that help you make the right decision. We will provide guidance on what specific information means and highlight the details that require additional consideration.
For more information on Commercial Credit Reports, contact us today. We are always happy to help.
