Technical Due Diligence vs Schedule of Condition: When You Need Which

Technical due diligence (TDD) and a schedule of condition are two different commercial inspection deliverables, and choosing the wrong one is a common source of dispute when something goes wrong later.

TDD is an acquisition exercise. It is commissioned by a buyer considering purchasing a commercial property. Typical scope includes structural, building services, environmental, statutory compliance, and capital expenditure forecasting over a defined horizon. The Australian Property Institute provides guidance for commercial TDD; RICS publishes the international reference "Technical Due Diligence of Commercial Property".

A schedule of condition is a lease exercise. It is commissioned by either a landlord or a tenant at the start of a commercial tenancy to establish the baseline condition against which make-good obligations will be measured at the end. Under Retail Leases legislation in NSW, Victoria and Queensland, condition reports are tenant-protective rather than mandatory, but they are the most effective tool a tenant has to resist inflated make-good claims.

The professional indemnity exposure is different too. TDD involves predictive forecasting (capex over 10 years), which is a richer source of negligence claims than a static schedule of condition. Fee structures should reflect that, which is why thorough TDD is several times the cost of a schedule of condition on the same asset.