Everything You Need to Know About Due Diligence and Land Purchase

April 26, 2018

Due Diligence and Land Purchase: What You Need to Know

Are you interested in land purchase? Before signing a contract, understand your rights and due diligence.Homes for sale in Charlotte, NC are on the market for less than two months before sale. Reduced inventory and increased buyer competition make a new land purchase competitive.

Take the necessary due diligence steps to ensure your purchase is the correct one.


Due diligence is the research phase of buying property. It gives the buyer the opportunity to have the home inspected.


The property is investigated for possible neighborhood downfalls, title complications, existing indebtedness, environmental issues, and boundaries.


The due diligence process and timing can vary by state, region or even municipality. You should inquire with your local agent to be sure you understand the timing.


Title and Deed


One of the most important due diligence tasks is to check the status of the title. Confirm that the seller has the right to sell the property. This is referred to as clean and marketable title.


Employ a lawyer or title company to obtain your title documents. These documents include a sale deed, chain of title, and property tax receipts.


Whoever you hire will research the title for the previous 30 years. The further back they research the more secure you can be you have a clear title.


A deed is different from a title. Title confirms ownership. A deed is a document that transfers that ownership to them.


A deed should contain the owner's identity, who they purchased it from, and when. You should review the physical description of the property.


Pay careful attention to encumbrances. These are claims other people have to use the property.

Examples of encumbrances are:

  • right-of-way
  • water rights
  • mineral rights
  • timber rights
  • gravel rights

Determine Potential Environmental Hazards.

Environmental hazards can occur within the home, and in the land, the building is located on. Older homes tend to have more of a risk.


Requesting a Phase I test investigates the current and historical uses of a property to identify potential environmental risks. Doing this protects you the buyer from future liability.


Having the home inspected for dangers to health identifies dangers such as radon or mold.



Always ask the seller if a survey exists and a copy of it. Check that it was performed by a licensed surveyor.


If there isn't a survey, start with the deed property description and the town tax map. Hire a licensed surveyor to perform a survey before your land purchase.


Violations of Law

If you are planning on building new or remodeling it is important to research applicable laws, codes, and regulations, including zoning and subdivision ordinances.


A deciding factor will be if you can use the property as you intend.


Often times you will find a property is not currently compliant with the existing law. If the property is not compliant, local officials will tell you if the violation must be fixed in advance of closing.


Existing Indebtedness.

When doing the title search you may discover that the current owner has agreed to a mortgage on the property.


Buyers may be able to assume the existing mortgage or demand it is satisfied in advance of the land purchase.


For a guide to successful due diligence in Charlotte, NC contact us.

Free Property Manager Interview Checklist