The Net Lease Due Diligence Checklist: Working the PSA Clock

Most diligence checklists treat the work as a list of reports to order. In a net lease acquisition, that framing misses the point. The reports matter, but what decides whether a buyer keeps its deposit is the calendar written into the purchase and sale agreement. Every item on the checklist exists to answer one question before a specific date: do we proceed, renegotiate, or walk?

This guide walks through a typical single-tenant net lease diligence period from the day the PSA is signed to the day the deal closes. It covers the clock, each workstream, and the distinction that matters most in practice: which deadlines are hard, meaning missing them costs the deposit or a right, and which are soft, meaning they are internal targets that feed a hard date.

Start with the clock, not the checklist

Before ordering a single report, read the PSA and build the deal calendar. A typical structure has five dates.

1. Effective date. Usually the date the last party signs, or the date escrow receives the fully executed agreement. Every other deadline counts from here, so confirm which definition the PSA uses.

2. Deposit due. Often one to three business days after the effective date. Late delivery can give the seller a right to terminate.

3. Due diligence expiration. The last day the buyer can terminate for any reason, or no reason, and recover its deposit. Some agreements require written notice to terminate; others require written notice to proceed, and silence means termination. The difference is not academic.

4. Financing contingency, if any. A separate, usually later date by which the buyer can terminate if it cannot obtain a loan on stated terms.

5. Closing date. Often a fixed number of days after diligence expiration, sometimes with a paid extension option.

Take an illustrative deal: a $6.2 million single-tenant retail property leased to a regional pharmacy operator, with a $150,000 initial deposit. The PSA is effective March 2. The deposit is due in two business days. Diligence runs 30 days and expires April 1. The financing contingency expires April 16. Closing is 30 days after diligence expiration, on May 1.

These dates are examples. Every PSA sets its own, and many include business-day conventions, time-of-day cutoffs, and notice requirements that change when a deadline actually falls. Counsel should confirm the calendar before it goes into any tracking system.

Hard deadlines versus soft deadlines

A hard deadline is one where the consequence is set by contract and cannot be fixed by working faster afterward. A soft deadline is one the team sets for itself so that a hard deadline is met with a decision, not a scramble.

Hard

• Diligence expiration. After this date, the deposit is typically nonrefundable except for seller default or failure of a specific closing condition. On the example deal, missing April 1 puts $150,000 at risk.

• Financing contingency. If the PSA has one, missing the termination notice usually converts the deal into an all-cash obligation in substance, even if the loan falls through.

• Title and survey objection deadline. Missing it rarely costs the deposit directly, but it usually means the buyer is deemed to have accepted the exceptions. A recorded easement discovered on day 20 may become a permitted exception the buyer must take.

• Closing. Failing to close on the date, absent an extension, is usually a buyer default, and the deposit is often the seller’s liquidated damages.

• Deposit delivery. Short and easy to miss when wiring instructions are still being verified.

Soft

• Report ordering and receipt dates for the survey, Phase I, PCA, and zoning report.

• Internal investment committee review, typically scheduled several days before diligence expiration.

• Lender milestones such as appraisal, term sheet, and commitment, which matter because they feed the financing contingency.

• Estoppel and SNDA requests, which are usually a seller obligation and a closing condition rather than a diligence item, but must be requested early to arrive on time.

The practical rule: every soft deadline should be set backward from the hard deadline it serves, with enough room to read the result and act on it. A Phase I that arrives the morning diligence expires has technically arrived, but the buyer has lost the ability to negotiate a fix.

The lease and every amendment

In a single-tenant net lease, the lease is the asset. The diligence team’s first job is to assemble the complete lease file and confirm it is complete.

• The original lease, every amendment, side letters, commencement date memoranda, and any assignment or assumption agreements.

• Rent schedule, including escalations and the dates they apply. Rebuild the schedule from the lease rather than relying on the offering memorandum.

• Expense responsibilities. “NNN” in the marketing materials does not settle who replaces the roof or the parking lot. Read the maintenance, repair, and replacement clauses.

• Term, renewal options and their notice windows, and any early termination rights.

• Rights that affect the sale itself: a tenant right of first refusal or right of first offer on a sale must be waived or have lapsed before closing, and the seller should be required to deliver that evidence.

• Co-tenancy, go-dark, and continuous operation provisions, which matter more for some retail formats than others.

Ask the seller in writing to represent that the documents delivered are the complete lease. The tenant estoppel will later confirm or contradict that representation.

Guaranty review

A net lease is often underwritten on the credit behind it, and that credit sits in the guaranty as much as the tenant entity. Confirm who actually guarantees the lease. A lease marketed under a national brand may be signed by a subsidiary or franchisee, with the parent guaranty limited, capped, or absent.

• Identify the guarantor entity by its exact legal name and confirm it exists and is in good standing.

• Read for caps, burn-offs tied to time or financial tests, and release triggers such as an assignment to a successor meeting a net worth threshold.

• Check whether prior assignments released the original guarantor.

• Obtain guarantor financial statements if the lease requires their delivery.

Loan application and lender diligence

If the deal is financed, the lender runs its own diligence on its own timeline, and that timeline often drives the financing contingency. Submit the loan application as soon as the PSA is signed. Expect the lender to require an appraisal, its own or reliance on the buyer’s third-party reports, the lease and guaranty, the estoppel, and an SNDA.

Coordinate third-party reports with the lender before ordering. Many lenders require that the Phase I, PCA, and survey be addressed to them or carry a reliance letter. Ordering reports that the lender later rejects costs time that a 30-day diligence period does not have.

Site visit

Visit the property early. In a net lease deal, the tenant usually controls the premises, so arrange access through the seller and respect the tenant’s operations. Look at the building, the roof where accessible, the parking lot, signage, access points, and neighboring uses. Talk to the store manager if the tenant permits it. A site visit also tests the offering memorandum: whether the property looks like the photographs, whether traffic counts and access feel credible, and whether anything visible contradicts the lease, such as an outparcel use that may conflict with an exclusive.

Title commitment and exceptions

Order the title commitment on day one. Review Schedule B exceptions one by one and obtain copies of every recorded document listed. Common items in net lease deals include utility easements, reciprocal easement agreements, declarations with use restrictions, and the recorded memorandum of lease.

Deliver a written objection letter by the objection deadline. Typical PSAs give the seller a period to respond, then give the buyer a choice to accept or terminate. Track the full sequence; the seller’s response period can run close to diligence expiration. Coordinate endorsements, such as zoning, access, and contiguity, with the title company early, because some require survey or zoning information to issue.

Tax assessment and appeal deadlines

In most triple net leases, the tenant reimburses or directly pays real estate taxes. Taxes still matter to the buyer. A sale can trigger reassessment in some jurisdictions, and a lease may cap, exclude, or limit the pass-through of increases tied to a sale. Read the tax clause, pull the current assessment and tax bills, and confirm payment status.

Note any pending appeal and any appeal deadline that will fall during or shortly after the ownership change. Appeal windows vary widely by jurisdiction and are often short. Agree in the PSA who controls a pending appeal and who receives any refund, and how taxes are prorated at closing given the tenant’s reimbursement obligations.

ALTA survey

Order an ALTA/NSPS Land Title Survey with the Table A items the buyer, lender, and title company need. The current Minimum Standard Detail Requirements took effect on February 23, 2026, and apply to surveys commenced on or after that date. The survey shows boundaries, easements plotted from the title commitment, encroachments, access, parking counts, and flood zone designation. Compare parking counts against both zoning requirements and any parking ratio the lease requires the landlord to maintain.

Property condition assessment

A PCA, typically following ASTM E2018, identifies material physical deficiencies and estimates costs to remedy them. In a net lease deal, the question is not only what is wrong, but who pays. If the tenant is responsible for roof and structure, a deferred roof replacement is a tenant obligation and may be a lease enforcement issue. If the landlord retains roof and structure, as in many double net leases, the same finding is a capital cost the buyer will own. Read the PCA alongside the lease’s repair clause.

Phase I environmental site assessment

A Phase I following ASTM E1527-21 supports the buyer’s all appropriate inquiries defenses under federal environmental law. Timing matters: certain components must be completed within 180 days before acquisition, and the report as a whole within one year, so a seller-provided Phase I may need an update. Pay attention to recognized environmental conditions on the site and nearby. Former gas stations and dry cleaners on adjoining parcels are common findings near retail net lease properties. A recommendation for a Phase II can consume most of a 30-day diligence period, which is why the Phase I should be ordered on day one.

Zoning report

A third-party zoning report confirms the permitted use, compliance with setbacks, parking, and other requirements, and any open violations. The critical net lease question is rebuild rights: if the property is legal nonconforming and is destroyed by casualty, can it be rebuilt as is? A tenant may have a termination right after casualty. If the property cannot be rebuilt, that right becomes much more consequential.

Tenant estoppel

The estoppel is the tenant’s certification of the lease terms and status. Request it early, using the form the lease requires if it specifies one; many leases give the tenant a fixed number of days to respond, and national tenants often insist on their own forms. When it arrives, compare it field by field to the lease and amendments: rent, term, options, defaults, offsets, prepaid rent, and any rights to purchase. Any discrepancy is either a diligence finding or a document you have not seen.

SNDA

If the purchase is financed, the lender will usually require a subordination, non-disturbance and attornment agreement from the tenant. Check whether the lease obligates the tenant to sign one, on what form, and within what period. Many credit tenants will only sign their own form, and negotiations between tenant and lender counsel can run longer than either expects.

Insurance review

Confirm what the lease requires the tenant to carry, and whether the tenant may self-insure. Large credit tenants often have that right, subject to net worth tests. Review current certificates, confirm the landlord is named as required, and check the flood zone designation from the survey against required flood coverage. Decide what the buyer will carry itself, such as contingent liability or rent loss coverage, and bind it before closing.

Keeping the period on schedule

Three habits keep diligence ahead of its deadlines. First, order every third-party report on the effective date, not after the lease review. Second, assign each item a single owner and a date set backward from the hard deadline it serves. Third, hold a decision meeting several days before diligence expiration with every finding summarized and every open item named. If a material issue is still open on that day, the options are to negotiate an extension, renegotiate price, or terminate. Waiting to see what happens is not an option the PSA provides.

Where Rets fits

Rets runs diligence on the PSA clock with a Net Lease Sprint checklist. Hard deadlines, such as diligence expiration and closing, go onto the firm’s critical dates and are marked “missing this costs the deposit.” Rets abstracts the lease and amendments with page citations, builds the rent schedule from the lease, and tracks estoppels as requested, received, or overdue, comparing each one to the lease field by field. After closing, the same record tracks critical dates, rent, and debt.