Just as buying a home requires certain additional due diligence, the same goes for purchasing land. It usually takes more time and work to perform due diligence on vacant land than an existing home. Below, we will cover a list of important due diligence items unique to buying land.
Search the Title
When searching the title to ensure that the land is free and clear to purchase, it is generally advised to trace back 30 years. Locate relevant documents like, the sale deed and property tax receipts, to confirm ownership of the title.
Verify Original Documents of Purchase
A deed may be the single most important document to locate and review. Your title company will perform a title search to make sure the title is free and clear to transfer to buyer. If you'd like, your agent will provide the deed to you or they can be found online and downloaded for a small fee. If the deed isn’t available online, inquire with the town or county registry. The deed is such an important document because it states what exactly is for sale, where it’s located, and any encumbrances that may be tied to the title.
Have a "Perc" or "Perk" Test Done
On rural sites without municipal sewage systems, a failed perc test means that no house can be built – which is why you should make any offer to purchase land contingent on the site passing the soil and perc tests.
Have Land Surveyed by a Professional
You’ll want to have a land inspection before purchase of a property. If there isn’t physical evidence or legal documents showing the boundary lines and measurement of the land, spending a little extra money on a professional to survey the property is well worth it. A surveyor will not only measure the land you intend to purchase, he or she will also provide a detailed legal description including, marking property boundaries zoning status, any issues with protected land or flood plains, etc.
Ensure Property Taxes are Up-to-Date
Make sure all property taxes have been paid by the current owner and are up-to-date. Request original receipts of all property taxes paid to prevent having to back-pay on unpaid property taxes.
Easements and Rights of Way
FLOOD ZONESWATER AND MINERAL RIGHTSENDANGERED SPECIES & HISTORICAL SITESOther less common issues that can affect whether and how you can use a piece of land include the presence of an endangered species, an archeological site such as a Native American burial site, or special zoning restrictions imposed on environmentally sensitive site
Conclusion
Hopefully, after reading this article you feel better equipped to perform your own due diligence on raw land purchase. The purpose of due diligence in real estate is to collect enough information on the property to make the smartest buying decision possible. Due diligence is intended to hold sellers accountable as well as save buyers from making a bad purchase. So get out there and do your due diligence!
Search the Title
When searching the title to ensure that the land is free and clear to purchase, it is generally advised to trace back 30 years. Locate relevant documents like, the sale deed and property tax receipts, to confirm ownership of the title.
Verify Original Documents of Purchase
A deed may be the single most important document to locate and review. Your title company will perform a title search to make sure the title is free and clear to transfer to buyer. If you'd like, your agent will provide the deed to you or they can be found online and downloaded for a small fee. If the deed isn’t available online, inquire with the town or county registry. The deed is such an important document because it states what exactly is for sale, where it’s located, and any encumbrances that may be tied to the title.
Have a "Perc" or "Perk" Test Done
On rural sites without municipal sewage systems, a failed perc test means that no house can be built – which is why you should make any offer to purchase land contingent on the site passing the soil and perc tests.
Have Land Surveyed by a Professional
You’ll want to have a land inspection before purchase of a property. If there isn’t physical evidence or legal documents showing the boundary lines and measurement of the land, spending a little extra money on a professional to survey the property is well worth it. A surveyor will not only measure the land you intend to purchase, he or she will also provide a detailed legal description including, marking property boundaries zoning status, any issues with protected land or flood plains, etc.
Ensure Property Taxes are Up-to-Date
Make sure all property taxes have been paid by the current owner and are up-to-date. Request original receipts of all property taxes paid to prevent having to back-pay on unpaid property taxes.
Easements and Rights of Way
FLOOD ZONESWATER AND MINERAL RIGHTSENDANGERED SPECIES & HISTORICAL SITESOther less common issues that can affect whether and how you can use a piece of land include the presence of an endangered species, an archeological site such as a Native American burial site, or special zoning restrictions imposed on environmentally sensitive site
Conclusion
Hopefully, after reading this article you feel better equipped to perform your own due diligence on raw land purchase. The purpose of due diligence in real estate is to collect enough information on the property to make the smartest buying decision possible. Due diligence is intended to hold sellers accountable as well as save buyers from making a bad purchase. So get out there and do your due diligence!
