By Michelle E. Reid
People often have no fear when buying vacant commercial land. It is vacant after all. What could be wrong with it? So. Much. So much could be wrong with it. Though empty, less obvious problems that can quickly derail a project can lurk if you do not do your due diligence. So, here are my top three tips for you to consider when buying vacant commercial property:
- Get an ALTA/NSPS Survey. – Even in established areas, property lines change, are ignored, or are just plain forgotten. Locating easements on a property is also impossible without a survey (I have seen a handful of easements that run under proposed building sites). An ALTA/NSPS survey will show you the location of all improvements, utility lines, property lines, and any easements on the property among many other things. There is a bonus item here too: a title search! You must have a title search done to obtain an ALTA/NSPS survey. I could go on about why I recommend a title search and title insurance, but I will save that for another day.
- Hire an Environmental Engineer. – This one usually bites the client who says that the property has always been used as a [insert environmentally friendly business]. However, sixty years ago it may have been a gas station. Red flag. You never know what could be hiding in a property’s history. This is especially important if you are converting industrial property into apartments.
- Check Zoning. – Then check it again. Then have an attorney double check it. Even if the zoning department stated that your use was permitted, verify that conclusion. The value of property stems from what you can do with it and the law will not always protect that value even if you relied on a zoning department.
I know the instinct is to skip some of these items due to cost, but that thinking can have dire consequences. All of the steps above will help you catch issues that can likely be avoided, worked through, or can form the basis for your contract termination—saving you money in the end.
Michelle E. Reid represents individuals, developers, operating companies, and lenders in various matters including acquisitions, sales, leasing of multi-family, retail, office, and industrial sites, financing, commercial and residential condominium development, residential subdivisions, zoning, and the obtaining and granting of easements. Michelle is a licensed Ohio title agent and serves as a title agent in Kentucky. With her deep insight into real estate and related businesses, Michelle focuses on bringing real-world solutions to the table while meticulously ensuring the integrity of a transaction. She can be reached at 513-621-8900 or email@example.com.