Due Diligence: How To Find the Stuff You Need
Due diligence is extremely important, regardless of the type of property you are thinking of buying. In fact, in development property and land deals, buyers start the fact-gathering process with their first encounter with the property and it continues until they either bail out of the deal or go to settlement.
Here is a list of sources of information (people, places & things) that are good starting points if you are trying to research a property.
SALES AND OWNERSHIP DATA
Tax assessor information is available in several forms. If you do not want to use your real estate agent or broker, you can research particular properties through either the county courthouse where the property is located (Recorder of Deeds or Tax Assessment dept.), or use free or fee-paid databases that allow you to get information on properties nationwide or in a particular geographic area. (
http://www.firstamres.com,
http://www.brbpub.com,
http://www.web-detective.com
).
If you want to find out who owns the property but do not know the address, one way to be able to identify the property is to go to the municipal building and look at the tax maps or tax plats of properties in the municipality. By process of elimination, you should be able to identify the property (thus giving you owner name, address, parcel identifying number). It is a good idea to take a copy of the tax map with you when you return to the property since this will help you absolutely locate & identify the property, particularly if it is vacant land. Be aware that some of the information in the database or on the tax maps may not be accurate, particularly, size & shape of parcel, zoning classification, and if there are public utilities. (Tax map vendors include:
www.firstamres.com;
www.ordinance.com).
DEEDS AND OTHER RECORDED DOCUMENTS
Usually, but not always, deeds for properties are recorded in the courthouse for the county in which the property is located. In addition, you can find any other document that has been recorded against the property (such as restrictive covenants, mortgage & other liens, subdivision plan, easements). In PA, people usually use title insurance companies who send searchers to the various courthouses to look up records. The deed (at least in PA) contains the legal description of the property, which sets forth the actual dimensions.
NEW CONSTRUCTION COMMUNITIES
If you want to find out who is or will be building in an area, take one municipality at a time and get the list of approved subdivisions and land developments (manager, code enforcement, land development offices). Then you can visit the new construction sites, talk with the site agents and get brochures. If the jobs have not started yet, you can go to the builder websites for preview information.
MUNICIPAL RECORDS
You can identify properties that have applied for rezoning or subdivision & land development approval by requesting a list from the municipality of the properties. After you decide which properties you want to investigate further, make an appointment to review the development files and plans at the municipal office. You are entitled to review materials relating to actions taken by a municipality in public meetings and hearings. This can be an excellent source of information on owners who may be thinking of selling their properties.
UTILITY MAPS
Checking the street for manhole covers and hydrants won’t necessarily give you correct information about whether a property can be serviced by public water and sewer. Instead, consult the mapping available through the municipal or regional sewer & water authorities, county or regional planning commission and private water companies.
ZONING
Each municipality adopts a zoning ordinance and zoning map for the properties within its borders. This material is available for review or purchase at the municipal office or through private vendors. Always make sure you’re looking at the most current ordinance and map since these are amended periodically. In addition, read the whole ordinance and not just the section on the particular zoning classification because the ordinance contains provisions that apply across the board on issues like definitions of terms used, accessory uses & structures, signage, and minimum frontage requirements. (Private ordinance vendor: www.ordinance.com).
The zoning officer (a/k/a code enforcement officer) at the municipality is the one to whom you should direct your questions about the zoning ordinance or map or if you want to find out anything about a property that may have happened in the past, like granting of variances, special exceptions, conditional uses.
PROPOSED HIGHWAYS AND FACILITIES
Depending on the nature (federal, state, local), you can access information through the municipality, county/regional planning commission, municipal comprehensive or “master plan” and federal or state agencies.
PROFILE DATA OF AREA OR MUNICIPALITY
Municipalities and county or regional land planning agencies prepare comprehensive plans as a primary tool for their land planning. The comprehensive or master plan contains a wealth of information pulled from various sources including US Census Bureau and Dept. of Labor. In addition, you will find data about natural resources, statistical data on housing stock and non-residential developments, existing and proposed roads, transportation facilities, utilities, plants, commercial operations, hospitals and schools. Be sure to check out the proposed land use map and accompanying text. Here you might find clues for future growth areas and even potential for successfully rezoning particular properties. The comp plans are available at either the municipal office or the county/regional planning agency.
FLOODPLAIN MAPS
To determine if the property is in an area subject to flooding, consult floodplain maps. These are available through either the municipality, FEMA, or county/regional land planning agencies. (www.fema.gov).
Thanks for the helpful information and the resources.
How can you find out if:
1) Hazardous waste was ever stored on the property?
2) The site is affected by any EPA findings or pending actions (ground water, contaimination, etc.)?
3) Other pending actions which could have a negative effect (shopping centers, new traffic patterns, new buildings nearby, flight path changes, industrial noise, plant discharge or smoke-or foul orders)?
Thanks,
Glenn
Glenn,
There are several potential sources for the information you've listed.
1. EPA maintains an Enforcement & Compliance Docket and Information Center (ECDIC) at its website where you can research online rulings, notices and similar information. The environmental agency in your state may also have a similar resource on its website;
2. In PA when builders and developers have a property under contract, during their up-front feasibility period, they hire an environmental consultant to do a Phase 1 audit of the property, consisting of tasks like physical inspection and research and review of governmental files. Depending on what the Phase 1 shows and the client's needs, next-level analysis and testing can be done, for instance, through water and soil sampling. If you're serious about a property, you would be wise to have this done once it's under contract because your lender or flippee down the road will require the environmental report. In addition, buyers include in purchase contracts specific provisions requiring the seller to represent and warrant the absence in and on the property of hazardous or toxic substances, storage tanks, etc;
3. In states requiring property owners to provide written disclosure statements, you should get one for the property, though its contents may not necessarily be definitive;
4. Historic aerial photography of the area of the property (available through municipality, regional or county planning agency, USGS, private vendors) may be useful in identifying past or ongoing uses pointing in the direction of contamination.
Insofar as items listed in #3 of your Comment:
Generally, for complaints about operations of existing industrial plants, manufacturing, processing, etc., I would go to the gov. entity having jurisdiction over it, in addition to physically visiting the area at different times of day and talking with neighbors.
1. For any proposed or planned development of any type (comm., industrial, res., etc), I would start with the municipality since it is the one that grants subdivision and land devel. approval and issues building permits;
2. For things like airfield, flight patterns, go to the entity operating the facility. In addition, these issues are addressed in municipal ordinances and Comprehensive Plans of municipalities having such facilities within their borders;
3. I have found planners at the county or regional planning agency to be excellent sources of information and recommend your speaking with the person responsible for interacting with the municipality in question. In addition, review the mun. Comprehensive Plan to get information on a broad range of potentially relevant matters;
4. For info on existing or planned roads, highways, intersection improvements, go to the entity having jurisidction over the road (federal, state, local) as well as municipality.
Nancy
Dear Nancy,
Your comment is right on. It is true I have mainly developed information sources applicable to California. It is also true and perhaps a shortcoming in my logic that I focus on the point and place of the bargain.
However, if I were in New York I would once again concentrate on information applicable and directed to the point of offer.
I love Checkers, like Chess, hate GO, and am infatuated with Monopoly.
Respectfully Lucius
Dearest Lucius,
Put this one under chocolate and vanilla. I wouldn't be interested in exploring the owner until I had first determined at least preliminarily that the property of the owner was worth the next level of time and effort.
As for infatuation with games, it's baseball for me.
Nancy
Thank you also this article is full of important information!!!
Dear Nancy Chadwick,
Thank you for the great book. My you certainly list everything to check out. Very extensive. Of course there are some other things that you might consider.
I usualy turn on my computer and go on line with Retran.Net. They give me all of the information I need. If I am still missing something I then hit the browser and go on line with American Title Information. But supose I still have the itch I go onto another
source which takes me into the Assessors records. I have an additional four sources that flesh out anything else that is required. If I am just playing on the surface the MLS and two subsidiary services are enough.
As a Creative Investor I always want to know the true economic and social status of the owner of the property with whom I must deal. I check that fully. I can get almost any financial record available. When negotiations begin I know his credit balances, condition of his cards, taxes, car insurance and of course taxes paid and unpaid. I even know how things are between him and Uncle Sam.
Computer, online, a whole new world.
It is a new world, and still Sun Tzu, Musashi, Clauswitz are still applicable. Just a lot better intelligence information. Which makes the task of the Creative Investor so much more effective.
The Creative Real Estate Investor is playing three dimensional Chess while most Brokers and property owners at transaction level are playing Checkers. Check mate.
Thoughtfully Lucius
Dear Lucius,
The purpose of my article was to suggest sources of information about various aspects of the property itself because, as you know, it's necessary to weed out the properties that don't match need, want or feasibility before one goes running off to contact the universe of owners. Hence, the focus on issues like zoning, utilities, floodplain, municipal approvals, growth areas, and potential sources of property owners who may be thinking of selling and not the "true economic and social status of the owner."
The website you listed in your comment would indeed be informative if one's need for data were limited to a handful of counties in California. I assumed that investors would want databases for tax assessor, ordinance and mapping for a more comprehensive geographic area, namely, the entire US.
I've never been fond of playing Checkers.
Nancy
Hmm,
"Thank you for the great book. My you certainly list everything to check out. Very extensive. Of course there are some other things that you might consider."
For each compliment coming from the top, there is a (soft) punch coming from the bottom...Well Covered? You be the judge.
Omega1, are you asking me that question or did you mean it rhetorically?
Nancy
thank you nancy for a great article i give you a 10!!!! i no longer have to take a day off work to look up owners of properties, pay parking fee's or pay $0.10 per copy for deeds or mortgages.
thank you and god bless
keep the article coming
amynewbie
Nancy, you did it again. Very Helpful.
It's a question Nancy but it needs no response. Silent point at large more or less.
A good FREE place to see if your local government offices are online is www.statelocalgov.net. If the info is available online for your area there will be a link to it here. Why pay or get in your car when you can do it from your computer.