A due diligence report on vacant land is used to assess property for investment opportunities. The report will include a comprehensive analysis of the property. The essence of a due diligence report is to document what is known about the property. This report will assist buyers and sellers of real estate for development purposes.
As with any report, the initial section will be to outline the general overall description of the property. The following information would be essential components of the “General” section of the due diligence report. Additional sections will be posted on my blog.
1. Property Description and Ownership
Include name, address, city, phone number and email address – a complete contact list for the owners of the property would be a great reference. The property description will be a location description or directions to the property.
2. Legal Description
This is important for researching the property in public records. For this purpose, a Lot and Block, or Parcel Identification Number would be sufficient. Try to obtain a metes and bounds description of the property from the owner.
3. Tax Map and Parcel Size
The local municipal tax records/maps will have references to include in the report. The parcel size is typically stated in acres.
4. Master Plan Compliance
Visit your local municipal government Planning Office and find the parcel on the Master Plan approved for the community. This will outline government’s future overall growth patterns for the subject property and surrounding areas. Having your vision for the property consistent with local government would be the politically correct approach. Consistency is not always the case and amending the Master Plan may be the only way to develop property to its highest and best use.
5. Future Road Alignments & Right-of-Way Dedications
Obtain from local government their future plan for new roads, road realignments and expansion of road rights of ways. Determine how their plan effects the subject property and the surrounding area.
6. Review of Phase I Environmental Study, if available
If a Phase I environmental study has been prepared for the subject property and the owner provided a copy, review the findings in detail. This report, if not available, would be required by lenders and essential from your point of view.
7. Site Pictures
Walk the site and take enough pictures to document the site characteristics, adjacent properties, and existing roads. You can’t take too many photos. Include the essential overall site photos in the report. An aerial photograph is very important in assessing how the property is situated with the overall growth pattern of the immediate area. Check public and online sources first and if not current, retain an aerial company to fly the site and take sufficient photos from several perspectives.
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