Due diligence is a word that gets thrown around in a lot of circles, and carries with it an air of mystery. Due diligence is not, however, as ambiguous as it sounds. Due diligence simply means what it says: giving the diligence that is due to whatever is ahead. Simply put, due diligence when buying land means making sure you know what’s ahead and what’s at stake – know before you buy.
The Land Acquisition Due Diligence Checklist
1. Determine the APN (PIN)
The Assessor’s Parcel Number, sometimes known as the Property Identification Number, is assigned to parcels of land by the county tax assessor and is attached to the tax records for each parcel of land. It can be used to look up information about the land, making the rest of the checklist easier to work through.
2. Verify Ownership
Sometimes, someone other than the actual owner of the land will try and sell it. Clearly, this can create problems later, so be sure that the person selling the land actually owns it.
3. Wetland and Flood Plain Designations
These two destinations are problematic in their own right. In the case of flood plains, insurance must be purchased and another checklist gone through to ensure the stability of the land of any property built upon it. Likewise, wetlands often have federal regulations that prevent or circumvent building permits. It is important to verify or nullify either of these designations and work through them accordingly.
4. Size and Shape of the Property
Check the local GIS system to make sure the size indicated on the property listing is accurate. You can also use this system to verify the shape of the land. Odd shaped properties are hard to build upon and less useful than other plots of land.
Depending on the property and where it is situated, it may be necessary to procure an easement through a neighboring private property to ensure that you are able to access the parcel of land you want to buy. It does no good to own land if you have to trespass in order to access it.
6. Taxes and Re-Assessment of the Property
Taxes are never fun, no matter what, but it is especially important to know if the property you want to buy has back taxes that are due. Along this same vein, frequently the county will reassess properties once they are sold, which can increase the taxes. Be sure you know what to expect regarding these issues before it’s too late.
7. Zoning Restrictions
Depending on what you want to do with the property after you buy it, zoning could be a real issue. Make sure the property is zoned correctly for what you need so that you won’t have a problem when it comes time to utilize your land.
This is something that has taken many new land owners by surprise. Utilities are often taken for granted, but when it comes to vacant, rural land, things like sewer, phone, internet, etc. can be harder to obtain. Knowing if you need a septic tank, or if you will have slow Wi-Fi, are both good reasons to look into the available utilities before purchasing land.
HOAs are not as common when purchasing rural land, but it is still always wise to ask about. Something that was rural at one time, may be slated to become a development, which would carry with it some fees and rules commonly associated with Homeowners Associations (HOA’s).
Make an Educated Decision When Buying Land
Due diligence has its place in a lot of business dealings, and buying land is no exception. Neglecting due diligence when buying land might save you time at the outset, but is only likely to cause problems later. The more you know about the land you want to purchase is likely to save you time, money, and headaches for years down the road.
Search the database at Land.US if you’re ready to take the next step and purchase a piece of property.