The Ultimate Land Purchase Due Diligence Checklist [2024]

ChecklistsOctober 2024

Buying land can be a great investment, but there are several steps you must take to make sure you’re getting a good deal. This process is called “due diligence.” It’s like doing your homework before making a big decision. If you skip these steps, you could have unexpected problems, like legal issues or hidden costs. In this post, we’ll walk you through everything you need to check before buying land. Scroll to the bottom for the land purchase due diligence checklist.

What Is Land Due Diligence?

Due diligence means doing your research before you buy land. It helps you find out if there are any problems with the land that might affect its value or your ability to use it. This can include things like checking if the land is in a flood zone, verifying the legal ownership, and making sure it’s zoned for what you want to do with it.

Whether you’re buying land to build a home, develop property, or simply hold onto as an investment, due diligence is critical to ensure you’re making a smart decision.

Step 1: Financial Due Diligence

The first step in your due diligence process is to assess how the land fits within your financial plan. Start by checking property value, taxes, and financing options.

How to Do It:

• Compare Land Values: Use sites like Zillow, LandWatch, and Realtor.com to compare prices of similar properties nearby. This will help you get a sense of whether the asking price is fair.
• Property Taxes: Visit the county tax assessor’s website where the land is located. You can usually search for the parcel by address or parcel ID to get detailed tax records. Tools like PropertyShark also provide tax information.
• Financing Options: If you plan to finance the land, speak to your bank or lender early. For land loans, many buyers use services like Farm Credit or USDA Rural Development if the land qualifies for special financing.

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Step 2: Legal Due Diligence

Before buying land, it’s essential to verify ownership and ensure there are no legal claims against the property. Here’s how you can check.

How to Do It:

• Verify Ownership: Get a title search from a reputable title company, such as First American Title or Fidelity National Title. They will investigate any claims, liens, or disputes on the property.
• Check for Encumbrances (Easements, Liens): You can also use County Records Websites to access public records for things like liens or easements that could affect your use of the land.
• Survey the Land: A professional survey is key to knowing exactly where the property lines are. Use HomeAdvisor or Angi to find licensed land surveyors in your area.

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Step 3: Environmental Due Diligence

The environmental condition of land can greatly affect its value and usability. Checking for flood zones, soil contamination, and other risks is critical.

How to Do It:

• Check Flood Zones: Use FEMA’s Flood Map Service Center to determine whether the land is in a flood zone and if flood insurance is required.
• Environmental Hazards: You can hire environmental engineers to conduct a Phase I Environmental Site Assessment. For more localized assessments, check for any contamination via Envirofacts by the EPA, which provides data on nearby facilities that could affect land quality.
• Soil Quality: If you plan to farm or build on the land, contact your local Cooperative Extension Office or use services like SoilWeb to assess soil health and composition.

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Step 4: Zoning and Regulatory Due Diligence

Zoning laws dictate what you can build or develop on the land. Understanding current and future zoning regulations is vital to your plan.

How to Do It:

• Check Zoning Laws: You can check zoning classifications through your local City or County Planning Department. Many municipalities have zoning maps online or provide them by request.
• Research Future Land Use Plans: Visit your local government’s planning office website or check their long-term development plans (often referred to as Comprehensive Plans). These can be accessed via tools like MyLocalGov or directly through the city’s website.
• Permits and Approvals: For any building or development, check local requirements for building permits. Tools like PermitPlace can help you navigate local zoning and permit rules.

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Step 5: Physical Due Diligence

Finally, seeing the property in person is crucial. It’s also important to check for road access and utility availability, which can impact development costs.

How to Do It:

• Visit the Land: Schedule a site visit to inspect the land’s physical condition. Pay attention to the topography, slopes, or obstacles like large rocks or trees that could affect construction.
• Check Road Access: Many rural properties don’t have direct road access. Look up county maps to ensure the property has legal road access, or check Google Maps to view nearby roads.
• Utilities (Water, Electricity): Contact local utility companies to confirm service availability. Many counties have Utility Maps available online, which you can also find through services like OpenStreetMap for water and electric grid information.