What Due Diligence Should You Do Before Buying a Commercial Property in Victoria?
Quick Answer
Before buying a commercial property in Victoria, investigate more than the title and contract.
At a minimum, check the property’s planning and permitted use, title and easements, building condition and compliance, environmental history, ownership costs, owners corporation obligations and any existing lease.
Most importantly, ask:
Can this property actually do what my business needs it to do, at a cost and level of risk I can accept?
The Real Problem
Commercial property due diligence is often treated as a checklist.
That is too narrow.
The real purpose is to find out whether the property is commercially workable before you become committed to it.
A property can look attractive and still create problems.
The use may require planning approval. Access may be restricted by an easement. The building may need expensive compliance work. The land may have contamination risks. An owners corporation may be facing major expenditure.
And a Section 32 is not a substitute for your own investigation.
Consumer Affairs Victoria states that a Section 32 provides important information about matters such as title, easements, planning controls and outgoings, but does not tell you about building condition, building-regulation compliance or the accuracy of title measurements.
The goal is not to collect reports.
It is to find the information that could change your decision.
1. Can the property support what your business needs?
Start with the business, not the building.
Before making an offer, define what the property needs to do.
That might include:
- manufacturing
- warehousing
- storage
- retail
- office use
- customer access
- vehicle movements
- loading
- parking
- outdoor storage
- signage
- alterations
- future expansion
Then test those requirements against the planning framework.
Victoria’s planning schemes regulate land use and development. Depending on the zone and other controls, your proposed use may be allowed, require a planning permit or be prohibited.
Start with the property’s VicPlan planning property report to identify the relevant zone and overlays.
Then check:
- current use
- proposed use
- planning permits and conditions
- endorsed plans
- overlays
- car parking
- access and loading
- signage
- proposed alterations
- nearby planning changes
Don’t stop at the zoning label.
The question isn’t whether the property is “commercial”. It’s whether your business can operate there as intended.
2. What does the title tell you?
Obtain the current title and relevant instruments.
Land Use Victoria says a title search identifies the registered proprietor, land description and encumbrances such as mortgages, caveats, covenants and notices.
For a commercial buyer, investigate:
- easements
- covenants
- restrictions
- leases and registered interests
- access rights
- drainage and services
- mortgages and caveats
- plan of subdivision
- lot boundaries
- owners corporation arrangements
Then compare the legal property with the physical property.
An access route may exist but be legally restricted.
A loading area may look available but be affected by another party’s rights.
A proposed extension may conflict with an easement.
Don’t assume that what you can see is what you legally control.
3. Is the building fit for purpose?
A commercial building should be assessed as an operating asset, not just inspected for obvious defects.
Depending on the property, investigate:
- roof and structure
- water ingress
- electrical systems
- plumbing and drainage
- air conditioning
- fire systems
- accessibility
- lifts
- loading areas
- hardstand
- plant and equipment
- previous alterations
- deferred maintenance
Then investigate compliance.
Commercial building owners have obligations around essential safety measures, which can include fire detection, emergency lighting, exit signs, hydrants, sprinklers and fire doors.
Ask for relevant:
- occupancy permits or certificates
- building permits
- approved plans
- final inspection documentation
- essential safety measure records
- annual reports
- alteration records
- outstanding notices
Don’t overlook asbestos
For older commercial and industrial buildings, asbestos can be a significant consideration, particularly if refurbishment or demolition is planned.
WorkSafe Victoria requires relevant workplaces to maintain asbestos registers and keep information about identified asbestos-containing material up to date.
An occupied building is not necessarily a building that is compliant with everything your business wants to do.
4. Could the land have contamination issues?
This matters particularly for industrial, manufacturing, automotive, storage and other properties with potentially contaminating past uses.
EPA Victoria recommends investigating historical land use where contamination may be present.
Look for previous activities involving:
- fuel
- chemicals
- solvents
- manufacturing
- waste
- workshops
- underground tanks
- intensive industrial processes
If the property’s history raises concerns, obtain specialist environmental advice.
For higher-risk sites, an environmental audit may be appropriate.
The risk is not just clean-up cost.
Contamination can affect:
- permitted use
- development
- finance
- timing
- resale
- future capital expenditure
A clean-looking site is not necessarily a clean site.
5. What will the property really cost after settlement?
The purchase price is only the beginning.
Model the likely ownership costs, including:
- land tax
- council rates
- owners corporation fees
- insurance
- maintenance
- repairs
- capital expenditure
- utilities
- compliance
- property management
- refurbishment
- finance
- transaction costs
- GST and duty
Tax treatment can also vary depending on the transaction, ownership structure and property.
The Victorian State Revenue Office and Australian Taxation Office should be checked for the current treatment before committing.
The more useful question is:
What will this property cost the business to own over the next five or ten years?
Not simply:
“What does it cost to buy?”
6. Is there an owners corporation or existing tenant?
If the property is part of an owners corporation, investigate the costs and obligations that sit behind the lot.
Review:
- current levies
- proposed special levies
- recent meeting minutes
- maintenance plans
- upcoming works
- insurance
- disputes
- owners corporation rules
- contracts affecting common property
- restrictions on alterations or use
Consumer Affairs Victoria says an owners corporation certificate can provide information about fees, unpaid amounts, special fees and levies, repairs, maintenance, rules and recent resolutions.
If the property is leased
Treat the lease as part of the asset.
Check:
- rent
- rent reviews
- lease expiry
- options
- incentives
- make-good obligations
- outgoings recovery
- security
- tenant covenant
- arrears
- maintenance responsibilities
- permitted use
- assignment rights
- upcoming capital expenditure
For an owner-occupier, an existing lease can also affect when you can take possession.
The right due diligence depends on why you are buying the property.
Challenge the common assumption: due diligence isn’t about finding everything wrong
You don’t need a hundred-page pile of reports.
You need answers to the questions that could change the decision.
Can the business legally operate there?
Can the building support it?
What rights come with the title?
What costs are coming?
Are there environmental or compliance risks?
What obligations come with the lease or owners corporation?
And most importantly:
Does the property still make commercial sense once you know the answers?
FAQs
How long should commercial property due diligence take in Victoria?
There is no standard timeframe. A straightforward property may require relatively limited investigation, while industrial, development, environmental or complex owners corporation matters can take much longer. The key is to complete material investigations before contractual protections or termination rights expire.
Is a building inspection enough?
No. A building inspection addresses only part of the risk. Depending on the property, you may also need legal, planning, environmental, fire safety, asbestos, valuation, tax and owners corporation investigations.
Does a Section 32 protect a commercial property buyer?
No. It is an important legal disclosure document, but it does not replace independent investigation of the building, planning position, environmental risks or commercial suitability.
Should I get a valuation?
Often, particularly where the purchase represents a significant investment for the business or the property is being bought as an investment. A valuation can help test the price against market evidence, income and alternative-use considerations.
When should due diligence start?
Before you become committed to the purchase.
The earlier you identify a problem, the more options you have to investigate further, negotiate, change the terms, adjust the price or walk away.
The Bottom Line
Good commercial property due diligence is not about finding the largest number of problems.
It is about finding the right information before your options disappear.
Check the planning position. Check the title. Check the building. Check the land. Check the costs. Check the lease and owners corporation.
Then ask the question that matters most:
Can this property do what my business needs it to do, at a cost and level of risk that makes commercial sense?
Property decisions are business decisions.
Finding an opportunity is only the beginning.
The real work is interrogating it before the opportunity becomes an obligation.
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