Due Diligence Checklist for Raw Land: Focus Upon Residential Subdivisions

[Steve Harris]

I’ve learned that development risk very much includes whether you have conducted thorough due diligence.  A friend recently asked me what goes into due diligence of raw land.  I thought I would share with this group what I believe is necessary to conduct thorough due diligence on raw land.  While this is tailored for residential land, this list in most cases involves commercial as well.

Here’s the due diligence checklist I use on every raw land deal.  I welcome your comments and suggestions from your experience.

1. Title Research

• Order a full preliminary title commitment + 30-year search
• Verify seller is on Schedule A and legal description matches the survey
• Review all exceptions: easements, covenants, restrictions (CC&Rs), deed restrictions
• Check for mineral, oil, gas, water, and timber rights - lacking mineral rights can impair development
• Confirm no liens, judgments, unpaid taxes, or delinquent assessments
• Identify any conservation easements or HOA/POA obligations
• Get title insurance requirements and cost estimate early

2. Survey

• Commission a new boundary survey (or updated ALTA/NSPS Land Title Survey certified to buyer + lender)
• Order a separate topographic survey (1' or 2' contours minimum)
• Order a tree survey. Many municipalities require tree mitigation based upon caliper sizes above a certain size.
• Locate all easements, rights-of-way, power lines, and buried utilities on the ground
• Identify any encroachments, fences, or unrecorded improvements
• Confirm flood zone (FEMA map + surveyor annotation) and wetland flags
• Compare to old surveys whenever possible – sometimes surveyors use an old surveys with potential errors to save money, allowing errors to continue.

3. Soils & Geotechnical. Largest $$ risk is your dirt because you cannot test it all. I once did12 borings on a 3-acre site, yet we somehow missed a buried passenger train car used to fill the site in the 1940’s.

• Hire a geotechnical engineer for borings/test pits. Best to bore where lots will be and retention ponds are planned, so a prelim site plan is needed.
• Determine bearing capacity, shrink/swell potential, and compaction requirements
• Run percolation tests if septic is planned.
• Check for expansive clays, rock outcrops, high water table, or contamination
• Get slope stability analysis and cut/fill volume estimates
• Things can be missed – I once did 12 borings in a 3-acre site yet still somehow missed a buried passenger train car used to fill the site in the 1940’s.  Even after testing, soils is your greatest unknown condition a project.

4. Utilities & Infrastructure

• Contact every provider for written availability & capacity letters: – primarily for water and sewer.  Will also need electric, natural gas if available, and telecom/fiber.
• Map distance to nearest lines and request extension cost estimates if needed.  
• Calculate tap fees, impact fees, connection charges, and off-site improvements
• Confirm stormwater / drainage capacity and outfall locations

5. Zoning, Entitlements & Land Use

• Verify current zoning, process to change zoning, annexation, allowed density, setbacks, and amenity requirements
• Review comprehensive plan & future land-use map
• Study local subdivision ordinance, platting process, and timelines for approvals
• Research impact fees, school concurrency requirements, impact fees, and permit fees.
• Lobby planning and city council members at an early stage to uncover potential political issues preventing approval.

6. Environmental & Regulatory / Ecological

• Phase I Environmental Site Assessment (ESA). Phase II is needed.
• Wetlands delineation and assess if mitigation opportunities are possible.
• Threatened / endangered species review and budget to resolve
• Archeological / cultural resource check

7. Physical Site, Access & Market Reality Check

• Always walk the site and take pictures / drone aerial. NEVER buy from a google map aerial.
• Confirm legal & physical access (deeded ingress/egress)
• Obtain a rough horizontal development cost estimates using local contractors
• Market study — comparable lot sales and absorption rate.
• Full pro forma with realistic entitlement timeline (6–24 months is normal) for entitlement + permit.
• Discuss your economics with regional and national home builders.

8. Traffic Impact Study & Transportation

• Engage a licensed traffic engineer to create a traffic impact analysis (TIA). They will research the following:
  • Preliminary scoping meeting or letter from traffic engineer familiar with jurisdiction
  • Estimate trip generation using ITE guidelines on lot count/housing type
  • Identify nearby intersections / road segments that may require study.
  • Get preliminary cost estimate for potential mitigation (signal upgrades, turn lanes, road widening)

9. Other outside agencies you may or may not need approvals from:

      Regional Water Management Districts – for off-site drainage.  Varies by state. They regulate storm water discharge off site.

      State Agencies – Where applicable

• Dept. of Environmental Protection — wetland impacts, NPDES stormwater permit (CGCP), coastal work
• Dept. of Transportation — driveway/access permits if connecting to a state road
• Fish & Wildlife — If you will impact protected species on your land

      Federal Agencies – Where applicable

• Army Corps of Engineers —wetland / regulated water impacts
• FEMA — CLOMR / LOMR if in or near a floodplain
• US Fish & Wildlife Service — Endangered Species Act consultation if federally listed species are present

Here is a summary of consultants typically needed on most raw land developments:

Civil & Landscape Architect

Surveyor

Geotechnical Engineer

Environmental Engineer

Ecological Engineer / Scientist

Traffic Engineer

Land Use Attorney

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Hope this is useful.  Happy to share more about my background, current focus, and market insights in a private conversation.  Thanks in advance for any insights you share or connections.  Steve