Due Diligence – Doing Your Research
The term due diligence gets thrown around loosely oftentimes. Due diligence is defined as “reasonable steps taken by a person in order to satisfy a legal requirement, especially in buying or selling something.” This due diligence research time period can be applied to a number of things. It’s basically doing your homework before making a definite decision.
Due diligence is commonly used in association with real estate transactions, such as contracts, negotiations, and closings. However, buying and selling land is much different than residential real estate, condos, or commercial properties. So the question I hear often is how does due diligence in land purchases differ from that of residential or commercial transactions? Here are a few things that you should check out during the due diligence period prior to closing on a property.
- Accessibility – Access is first and foremost. How, when, and who uses your property depends on the access. Access comes in many forms such as right-of-ways and easements. This is especially true if the property you’re interested in doesn’t possess any road frontage. However, even if the property does have road frontage, that doesn’t mean that someone doesn’t have the right to cross your soon-to-be property, usually for ingress and egress purposes. To be safe, always research the accessibility of a property.
- Utilities and Septic Permits – Many properties can have homes or hunting cabins built on them. This is directly related to the ability to have utilities ran to a property. Also, septic systems require a percolation permit (determined by what is commonly known as a perc test) in order to determine how large of a structure can be built on a property. This, once again, is something that needs to be handled during the due diligence period if building is a goal of yours.
- Surveys and Appraisals – Many times, especially if a loan is required, a financial institution will require an appraisal of the property. In order to do this, they must know what they are appraising, so a survey may be required. Both the survey and the appraisal need to be done during the due diligence period. Both surveys and appraisals are integral components of a real estate transaction and without either of these the deal is essentially dead in the water.
If you are looking to purchase a property don’t be intimidated by what you may not be familiar with. As land specialists we have many years of experience navigating these channels. When it comes to purchasing land, you can trust the land specialists at America’s number one outdoor brand. We are America’s Land Specialists and we have you covered!