Even though everyone aspires to own a home at some point in their lives, many people still prefer to purchase or invest in land directly. Any real estate purchase includes a significant portion of land costs since it offers a far better rate of return than other types of property. Additionally, it offers the buyer flexibility in terms of design, set up, floor plan, etc. However, when buying land, one must conduct careful due diligence. Prior to making a payment or signing a contract, real estate due diligence involves reviewing pertinent papers.
Once you have found a great parcel of land and submit an offer to buy, you will have a period of due diligence to conduct thorough research before closing on the sale. This time should be spent very wisely and efficiently so you know exactly what you are getting into with the purchase.
Type of Property and Potential Uses o Land? o Building? o Fixtures? o Other Improvements? o Other Rights (e.g., water rights, oil/mineral/natural gas/timber rights)? o Entire fee title interest including all air rights and subterranean rights? o Development rights? o Intended Use
Physical Condition and Location of the Property o Property Physical Condition: structural systems; mechanical and electrical equipment; roof; curtain wall; fire and life safety systems; elevator maintenance; load limits; parking lot; drainage systems; soil erosion. Any deferred maintenance? Code compliance? Remaining useful life? o Roof and mechanical warranties; copies of as-built plans; certificate of occupancy; occupancy placards o Access: Roads; curb cuts; circulation/parking/loading; railroads; public transit o Utility Service: Utilities to site? Adequate utilities for intended use? Separate metering? o Demographics?
Taxes, Land Use and Governmental Impositions o Real Estate Taxes and Assessments: Do taxes comport with value? Has assessed value been increased or appealed? Are there special assessments or special service areas? Public user fees? Water and/or sewer charges? o Zoning If No Development: Does current use conform or qualify as pre-existing? o Zoning If Intend to Develop/Change Use/Improve: Do you need variance, special use, rezoning? Any issues with subdividing? Density? Public use? Height, setback requirements? Design criteria? Landscaping requirements? Sprinkler/Fire life safety? ADA requirements? Adequate parking? Traffic mitigation? Affordable housing restrictions? Historic/landmark district restrictions? Traditional Special Uses (e.g. drive through windows)? o Private Land Use Controls: CC&Rs, deed restrictions, ground leases, masterleases