Doing Your Due Diligence

Due Diligence…Verify, Verify, Verify

Doing due diligence on a tract of land you want to buy falls on the shoulders of one individual…you. No one will care about the deal any more than you. Prepare to do your homework. The depths of due diligence, and the items that will need to be discovered, verified and researched, will vary depending on the type of land and its intended use. Let’s consider a few basic areas related to rural real estate.

Due diligence starts with the purchase contract. Read it, understand it, ask questions about it and use it to fully detail the terms of the purchase as they have been negotiated with the seller. Your real estate agent should be diligent to help you document the terms of the deal clearly in the contract. Having the seller and buyer see “eye to eye” on the terms at this stage of the deal will reduce the chances of something going wrong for either party before closing.

Depending on the present use of the land, you will need to verify any number of items that will affect your future use of the tract. Have you seen the CRP or WRP contracts? Have you read the restrictions of the conservation easement, the deed restrictions or other encumbrances that will limit the use of the tract? What about that hunting lease or farm lease…does it match what you were told during the negotiating process? Ask to see the conveyance document on “deeded accesses” if you are unsure about that servitude.

If you plan to clear some of the tract for farming, development or even a new road, will you be clearing wetlands? Will that bridge you need require a 404 from the Corps or mitigation credits? Diligent buyers of farm land look for large diesel spills at wells and near full tanks and check for empty chemical containers dumped in nearby ditches or creeks to alert them of potential environmental quality issues.

Timberland buyers should understand the area markets and mills if buying a tract in a new area. Will the terrain allow complete mechanical harvest or are there acres that loggers just won’t work? Do you have good access to get your timber out?

Your closing attorney should be able to catch title issues that may cause you problems if left uncured, but you may need to specify that he look for items that are critical to your reason for purchase.  For instance, if you’re buying half the mineral rights, does that mean half of 100% or does the seller only own 50% herself? A general title search will not necessarily determine this information for you.

You can verify river stages, flood histories and FEMA flood plain data yourself online these days if the tract is in a marginal elevation area. But you need to do this. Ask your real estate agent to help you identify internet resources if you need them. Confirm the information you’ve been told if you’re unsure.

The list of items to verify goes on and on depending on the tract and its use. The point is to confirm, verify and understand all the major items that will impact you the hardest. The real estate agent is required by law to tell you about all material facts he is aware of that may impact the property’s value and use. The key is “that he is aware of.” Your agent may not know everything about every detail that is critical to you. You as the buyer are ultimately responsible to satisfy and protect your future interests with thoughtful due diligence.

Pat Porter is the broker for RecLand Realty, LLC. For more information about land for sale in Louisiana, Arkansas, Mississippi and Texas, see his website at