This article was written by Nancy Wang Principal Solicitor at W & G Lawyers.
Commercial property in South East Queensland remains in high demand. Industrial land and yards around Brisbane are particularly scarce, and a good site can attract several offers within days of being listed. When you are competing with other buyers, it is tempting to sign quickly, shorten the conditions or waive them altogether.
That is exactly when legal due diligence matters most. A commercial contract generally gives you far fewer protections than a residential one. There is no cooling-off period, the seller’s disclosure covers only certain matters, and once your due diligence date passes you will usually be taken to have accepted the property as it is. The few days you have under the contract may be the only real opportunity you get to find out what you are buying.
What is legal due diligence?
Legal due diligence is the process of checking the legal position of the property, the seller, any lease and your own buying structure before you become locked into the purchase. It is different from a building inspection, a valuation or financial advice. Those are important too, and we often work alongside your accountant, broker, valuer, town planner and building consultant.
Our role is to tell you what the contract, documents and searches say, what risks they reveal and what options you have under the contract while you can still act on them.
Why it matters more in the current economy
Several features of today’s market may make a commercial purchase riskier than it was a few years ago.
Higher borrowing costs. At the time of writing, the Reserve Bank has lifted the cash rate four times this year, taking it to its highest level since 2011. Higher rates increase your holding costs and may make lenders more cautious. A lender could value vacant land, or a property with a short or uncertain lease, well below the price you agreed to pay. That may leave you with a funding gap close to settlement.
Business stress. More than 14,000 Australian companies entered insolvency in the 2025–26 financial year, and around one in four of them were in construction. If the property is leased, the rent is only as reliable as the tenant and the guarantors behind it. If you intend to build, the financial strength of your builder could matter as much as the approval itself.
Motivated and distressed sellers. Some properties are now being sold by receivers, mortgagees or owners under financial pressure. These sales are often made on an “as is” basis with limited warranties and little room to negotiate after signing. Knowing who the seller is, whether it is under financial pressure and what security is held over the land becomes more important, not less.
Competition for scarce land. Brisbane’s industrial market remains tight, and recent industry research suggests that outdoor storage yards in Greater Brisbane are almost fully occupied. Competition puts pressure on you to accept a short due diligence period or a contract with fewer conditions. A shorter period means the work needs to be planned before you sign, not after.
Closer scrutiny of buyers. Foreign investment rules, the land tax surcharge for foreign owners and the anti-money laundering obligations that now apply to lawyers mean that the identity and structure of the buyer receive much closer attention. You should expect to be asked who owns and controls your buying entity, where its directors live and where your funds are coming from.
What W & G Lawyers can review for you
Every property is different, and we tailor the scope of our work to your purchase. A commercial due diligence by our firm may cover the following.
- The contract before you sign. We review the price, deposit structure, special conditions, due diligence and finance conditions, GST treatment and settlement terms, and can negotiate changes with the agent or the seller’s solicitors. This is the stage where you usually have the most bargaining power.
- Title and survey plan. We check who owns the land, and whether there are mortgages, caveats, easements or other interests on the title that could affect you.
- The seller’s disclosure. We check what the seller has disclosed, such as zoning, notices and proposed road or transport works, and whether it is complete and consistent with the other documents. Once you accept a disclosed matter, you may lose the ability to rely on it later.
- The lease. We read the whole lease, not just the agent’s summary. The term, any early termination rights, rent increases, whether outgoings can be recovered, the bond or bank guarantee, the guarantors, the permitted use and any side agreements can all affect the value of what you are buying.
- The tenant and guarantors. We can search the tenant company and the guarantors, check for insolvency or court proceedings, and request the rent ledger and arrears position from the managing agent.
- The seller. We search the seller’s company, its officers and their authority to sign, insolvency notices, court records and registered security interests, so you know who you are dealing with.
- Planning and development approvals. We obtain council records for the property, including any development approval, its conditions and infrastructure charges, and flag overlays such as flooding, airport and transport corridors. As we are not town planners, we give our observations and recommend that you confirm planning matters with your town planner.
- Environmental, flood and services searches. We order contamination register searches, flood information and services plans, and recommend further reports where the use or history of the site calls for them.
- Rates, water, land tax and GST. We check outstanding rates and charges, the seller’s land tax position and whether the sale may proceed as a GST-free going concern, which could affect your cash flow at settlement.
- Your buying structure. Whether you buy through a company, a trust or a self-managed super fund may affect duty, land tax, foreign investment and finance. We flag the issues early and work with your accountant so that the right entity signs the contract.
Time is the critical factor
Most commercial contracts give you a set number of days to complete your due diligence. If you do not act by the due diligence date, you may lose the right to end the contract on that ground, and in some contracts the seller may also be able to end the contract. Your deposit could then be at risk if you later find you cannot or do not wish to complete.
We recommend that you speak with us before you sign, so that the due diligence period is long enough for the searches and reports your purchase actually needs. Some council and government searches take several business days to return, and a lease or development approval can raise questions that need answers from the seller. Where possible, your due diligence and finance dates should work together, and any notice to the seller must be given in writing and on time.
Issues we commonly see
Some problems come up again and again in commercial purchases.
- A lease marketed as a five-year income stream may allow either party to end it on a few months’ notice. The secure income may be much shorter than it appears, and your lender may value the property accordingly.
- A gross lease may mean the rent already includes rates, land tax and insurance, so those costs come out of your return rather than the tenant’s pocket.
- The bond or rent in advance shown in the marketing material or the seller’s disclosure may not match the lease, which matters when the security is transferred at settlement.
- A development approval may have been obtained by a different party, may be close to lapsing, or may carry conditions such as retaining walls, fill and infrastructure charges that add significantly to your costs.
- A company or trust with an overseas director, shareholder or beneficiary may need foreign investment approval, even for vacant commercial land at a modest price, and the contract may not be conditional on that approval.
- Changing the buying entity after the contract is signed may require the seller’s agreement, a replacement contract, fresh lease documents and further duty advice.
Waiving due diligence is a decision, not a formality
In a competitive market you may decide to waive or shorten your due diligence to secure the property. That can be a legitimate commercial choice. You should make it with a clear understanding of what has not been checked and what risks you are accepting.
We can give you a short written summary of the open items so that your decision is an informed one, and so that the issues that remain can still be managed before settlement.
How we work with you
Our commercial due diligence is usually scoped in stages. The first stage covers the contract review, negotiation, due diligence searches and lease review, with a written report that ranks the issues by priority and recommends what to do next. The second stage is the conveyancing through to settlement, so you commit to that work only once you are comfortable proceeding.
We coordinate with your accountant, broker, valuer, town planner and building consultant so that nothing falls between advisers, and we keep you informed of the deadlines that matter.
If you are considering a commercial purchase, contact W & G Lawyers before you sign. A short conversation at the start may save you considerable time, cost and stress later.
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Disclaimer
This article is general information only and does not constitute legal advice under Australian law. For advice specific to your situation, please contact W & G Lawyers. For further details, please click here to view our disclaimer.