Due Diligence

Due diligence is one of the most important steps in the land buying journey. If you do it right, you will have the peace of mind that comes with knowing your investment is safe; and, in all likelihood, well-positioned to continue appreciating in value over the years. However, if you drop the ball on this critical aspect of locking down your dream property, you could make a regrettable and expensive mistake.

At the end of the day, it’s important to do whatever you can to avoid any surprises, and ensure you end up with a high-quality piece of land at the right price. It’s a bit of upfront effort, but it’s well worth it! As a result of doing your due diligence, you will not only make a smarter investment, but you will have the opportunity to learn about the unique features and qualities of the land you are buying. It’s a win/win! 

Planning and Zoning Due Diligence

The first things you’ll want to look at when you start your due diligence will be planning and zoning factors. These will determine what you’re able to do with the land. It may be tempting to just go with what the seller says the property can be used for, but it’s not a good idea. You’ll want to go straight to the source to make sure you can do with the property what you want. And to do this, you’ll want to consider:

• Type of Zoning
• Utilities
• Access
• Allowable Uses

Type of Zoning

Unless you’re planning on building something truly unique on the property, it should be easy to determine whether it’s right for your needs. If you’re looking to build a single-family home on the land parcel, for example, you’ll be able to determine if this is possible easily by contacting the local Planning & Zoning department. 

You’ll also want to determine if there’s a time limit to build, whether mobile/manufactured homes are allowed on the property, and whether you can build a tiny home on the land if these are options you want to explore. 

If you go through a service like Land Elevated, you’ll already have this information in the property listing. You’re just contacting the Planning & Zoning Department to make sure nothing has changed and it’s still zoned for whatever use you want it for. 

Utilities

If a property is zoned for residential development, you can be relatively certain that there will be a way to get utilities such as gas, water, sewer, and electricity onto the property. Utilities due diligence is about determining how exactly this can be done. 

Some properties will have plug-and-play connections already at the property line. Others won’t, which means you’ll need to determine whether you can install a septic system, which usually involves a perc test to see if it’s suitable for septic installation. 

If there’s no public water source, you’ll want to determine if you can dig a well on the property. And if so, you’ll want to contact a local company to see if the property is suitable for a well and how much it would cost to install one. 

The same can be said for electricity. If there are no connections, you’ll want to determine if it’s possible to get connections out to the property. And if that’s not feasible, whether you can use alternative energy sources like wind and solar on the property. 

Access

Access is a very important consideration of due diligence. There are two types of access to check for: legal and physical. If you have legal access but not physical access, you can always build a road (provided that’s allowable) to the property. But if you don’t have legal access, you could be forced to trespass to get on the property. So make sure there’s legal access at the minimum. And physical access is a definite bonus. 

Allowable Uses

There are a lot of possibilities that come to mind with raw land. Perhaps you want to build a home or a cabin on it eventually, but in the meantime, you want to do some camping on the property. Or maybe you want to live on the land in an RV while you build the home. 

If so, you’ll want to check and make sure that you’re allowed to do those things. If you want a hunting property, make sure hunting on it is allowed. Again, this is pretty easy to determine with a call, an email, or even a visit to the local zoning and development website. 

Title Due Diligence

Next up on the due diligence list is ensuring the land title is up to snuff. This means looking to make sure the title is “clean.” To do this, you’ll want to look for:

• Liens
• Encumbrances
• Chain of Title

Liens

A lien is essentially an outstanding debt against the property. The most common type of lien in real estate is a mortgage. Unless the land has a structure on it, there’s not likely to be a mortgage. But there could be other types of liens, which you’ll want to know about before purchasing the property. If there are liens on the property, you could insist that the seller clear them up before you agree to the purchase. 

Encumbrances

Encumbrances are kind of like liens, but they don’t necessarily have to be monetary. For example, a deed restriction is a type of encumbrance. Depending on the details of the deed restriction, it could prevent you from building on the property, which is definitely something you’ll want to know about. Other encumbrances include easements, which could be an agreement to let a third party use some portion of the land, and in so doing may restrict your usage of the property. 

Chain of Title

While searching for liens and encumbrances, it’s also important to check the chain of title. If there are gaps in the title history, during which it’s not clear who owned the property, it means the chain of title is not clear. A title that doesn’t have a clear chain is risky because someone else could make a case for ownership of the property, which is the last thing anyone wants to deal with. 

Here at Land Elevated, we guarantee that all our properties come with a clear title guarantee. This is not to say that you shouldn’t check the title yourself — you definitely should. But you can rest easy knowing there won’t be any surprises on your search!

Survey Due Diligence

It’s usually a good idea to get a survey done on the property during the course of your due diligence. The most common type of survey done on raw land is called a Boundary Survey. This is done to confirm the property lines and is especially useful if you’re planning on building a fence or some other structure close to the property line. You don’t want to end up building on your neighbor’s property, even if it is only by a couple of feet. 

Environmental Due Diligence

It’s also important to ask the seller for any environmental reports or studies done on the property. Environmental concerns are most important when the property has been used for things that could cause risks to the new owners. 

Most raw land hasn’t been used for much of anything, but that doesn’t mean you shouldn’t check if there are any environmental risks on the property. If something comes up in the property’s history that could indicate environmental issues, it’s a good idea to hire a licensed consultant to do an environmental study before going forward with the sale. 

Conclusion

It’s important to do your own due diligence before purchasing any piece of property. Even if your best friend is selling the property and you trust them with your life, there may be things in the property history that they don’t know about. This is why due diligence is important. And much of it can be done with a computer and/or a phone from the comfort of your own home. 

At Land Elevated, we provide as many resources as we can on each property so you can perform your due diligence quickly and easily. We also have Land Specialists available to help you if you have trouble finding out about something regarding the property you’re interested in. We know where to look for contact information so you can get your due diligence done and become a proud landowner!