Due Diligence in Land Purchasing
What is Due Diligence?
Simply put, as related to Real Estate and Land transactions, due diligence means to do your homework or research to determine if a particular property will be good or bad fit in regards to your intended use. You will also need to find out if there are any past or present "attached" financial obligations (liens, delinquent taxes, etc).
Due diligence starts with reading and understanding the terms of the sale.
Is it a cash sale? Which usually means that full payment for the land is expected in a timeframe anywhere from 3 to 30 days.
Or is it a term sale? Where you will be making an initial downpayment, that sometimes includes an added processing/doc fee, and then paying the remaining balance in a fixed term of monthly payments that are agreed upon in a land contract.
Whether you are buying property through a real estate agent, land sales company, or an Individual, you should expect to be provided or have access to a detailed description of the property. If the details seem incomplete to you in any way, ASK QUESTIONS.
Some of the things that you will need to know are:
Legal Description of property.
Is there access to the property? - physical roads or deeded access.
Are there Utilities present?
Is there a Home owners or Property owners association? - with monthly or yearly dues, and are they current?
Are there any covenants, codes, and restrictions on the property?
How much are the property taxes? Are they current?
Terms of the Contract or Mortgage.
Directions to the property. - If you decide to make a personal visit (recommended)
Ask detailed questions. If your questions are not answered to your satisfaction, or even worse they are ignored. You will need to take that into consideration as a condition of doing business. Keep in mind there is an abundence of land for sale, make sure you are at all times comfortable.
County Records Search
County records are an excellent source of information. An increasing number of Counties are online now, so it makes it convenient for you to search land ownership and tax records. If you are comfortable searching on your own, you can use online sources such as NACo the National Association of Counties, or NETRonline.
If the particular County does not have an online presence, you can call them. The two sites listed above will have that information.
For information on land ownership - call the County Clerk.
For tax questions - contact the County Tax Assessor.
When speaking directly County employees, remember the number one rule is "Be Polite".
*The content of this guide is intended for informational purposes only. If you need specific legal advice, please contact an attorney licensed in the relevant jurisdiction.
