Globalbiz CRE Academy
Risk, Due Diligence & Deal Killers

Common CRE Deal Killers

The issues most likely to actually kill a CRE deal before closing

Common CRE deal killers are the specific, recurring issues — from title defects and environmental contamination to rollover cliffs and dishonest borrowers — that most often cause an otherwise viable transaction to fall apart before closing.

From Risk to Reality

A risk taxonomy describes what could go wrong in the abstract; a list of deal killers describes what actually, repeatedly does go wrong in practice. In experienced originators' and underwriters' experience, a relatively short list of issues accounts for most transactions that die after significant time and cost have already been invested.

Late Discovery Is What Makes These Fatal

Almost every deal killer on this list is manageable if caught early and unmanageable if discovered late. A title defect found in week one is a curable condition to closing; the same defect discovered the day before closing can force a costly extension or kill the deal outright. The same is true of environmental contamination, unresolved litigation, and a rollover cliff — all far easier to underwrite around, price into the deal, or walk away from cleanly when they surface during the diligence period rather than at the closing table.

Reconciliation and Trust Are the Common Thread

Two categories of deal killers are less about a single fact and more about a pattern: financials that don't reconcile across the rent roll, T-12, and tax returns, and a borrower who becomes unresponsive or is later found to have misrepresented material facts. Neither is necessarily fatal in isolation, but both erode the reviewer's confidence in everything else in the file — and once that confidence is gone, no single remaining document can fully restore it.

Title and Legal Deal Killers

  • Unresolved title defects, liens, or encumbrances discovered late in the process
  • Environmental contamination requiring costly remediation
  • Unresolved or newly discovered litigation involving the property or sponsor

Financial and Leasing Deal Killers

  • A rollover cliff — a large share of leases expiring in the same narrow window — discovered late in underwriting
  • Financial statements that don't reconcile across the rent roll, T-12, and tax returns
  • A material, unexplained change in occupancy or rent collections between application and closing

Borrower Behavior Deal Killers

  • A borrower who becomes unresponsive or repeatedly misses document deadlines as closing approaches
  • A borrower found to have misrepresented or omitted material facts
  • Discovery of undisclosed additional debt or side agreements

Module Check

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Which of the following is most accurately described as a 'rollover cliff'?

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Related Concepts

Frequently Asked Questions

What is a 'rollover cliff' in commercial real estate?

A rollover cliff is a concentration of a property's leases expiring within the same narrow window, creating a sudden re-leasing burden and cash flow risk if several tenants leave at once.

Why are issues discovered late in due diligence more likely to kill a deal?

Issues found early can typically be priced into the deal, negotiated, or cured before closing. The same issues discovered just before closing often force costly delays or leave no time to resolve them, killing the deal outright.