Land Due Diligence Checklist for Developers

Buying raw land for development is one of the highest-risk moves in commercial real estate. Unlike purchasing an existing building, land offers no income while you navigate entitlements, environmental reviews, and infrastructure unknowns. A comprehensive land due diligence checklist is the single most important tool developers use to avoid catastrophic surprises - and it can mean the difference between a profitable project and a seven-figure loss.

According to Marsh & Partners, a thorough due diligence process for land development can include 150 or more individual line items spanning legal, physical, environmental, and financial categories. Whether you are building a residential subdivision, a commercial center, or a mixed-use project, skipping even one critical step can derail your timeline by months and blow your budget wide open.

This guide walks you through every category on a developer-focused land due diligence checklist, with real cost data, typical timelines, and the red flags experienced developers watch for.

Planning a land acquisition or subdivision project? Clearhouse Lending provides horizontal construction loans and pre-development financing designed for developers who need capital during the due diligence and entitlement phase. Contact our team to discuss your deal.

What Is Land Due Diligence and Why Does It Matter?

Land due diligence is the systematic investigation of a parcel's legal, physical, environmental, and financial characteristics before closing on a purchase. It protects developers from hidden liabilities, confirms that the intended use is feasible, and gives lenders the confidence to fund the project. Without it, you are essentially gambling with every dollar you invest.

The due diligence period typically begins once a purchase and sale agreement (PSA) is executed and continues for a negotiated timeframe - usually 30 to 90 days for straightforward parcels, but potentially six months or longer for raw land requiring governmental approvals. During this window, the buyer has the right to investigate the property and, in most contracts, walk away if the findings are unacceptable.

For developers specifically, due diligence serves three core purposes. First, it validates whether the site can physically and legally support the planned project. Second, it quantifies the true cost of development by uncovering infrastructure gaps, soil issues, and environmental remediation needs. Third, it produces the documentation that lenders require before funding a land acquisition loan or construction draw.

The consequences of inadequate due diligence are severe. A site marketed as "fully developable" may lose 30% or more of its usable acreage once wetland delineation, floodplain mapping, or endangered species reviews are completed. Poor soils or shallow rock can add hundreds of thousands of dollars to grading and foundation costs. And a missed title defect can freeze your project in litigation for years.

What Should Your Land Due Diligence Checklist Include?

A complete land due diligence checklist for development should cover seven major categories: title and ownership, zoning and entitlements, environmental assessments, geotechnical and soils, surveys and boundaries, utilities and infrastructure, and financial feasibility. Each category contains multiple line items that must be investigated and documented before you commit to closing.

The checklist below is organized by investigation phase. Items in the first phase can usually be completed within the first two weeks using desktop research and public records. The second phase requires field work and third-party consultants. The final phase involves synthesizing all findings into a go or no-go decision.

Phase 1 - Desktop Research (Weeks 1-2):

• Title commitment and ownership verification
• Preliminary zoning and land-use classification
• Comprehensive plan and future land-use map review
• Flood zone determination (FEMA mapping)
• Tax records and assessment history
• Existing liens, judgments, and encumbrances
• Adjacent property uses and planned developments
• Utility provider identification and preliminary capacity inquiries

Phase 2 - Field Investigation (Weeks 2-6):

• ALTA/NSPS land title survey
• Phase I Environmental Site Assessment (ESA)
• Geotechnical investigation and soil borings
• Wetland delineation (if applicable)
• Topographic survey
• Traffic impact analysis (if required by jurisdiction)
• Utility capacity confirmation letters
• Boundary verification and easement mapping

Phase 3 - Synthesis and Decision (Weeks 6-8):

• Development budget reconciliation
• Pro forma sensitivity analysis
• Lender feasibility review
• Final go or no-go memorandum

For a deeper look at the financing side of pre-development work, see our pre-development financing guide. This checklist focuses on the investigative steps themselves rather than how to pay for them.

How Do You Evaluate Zoning and Entitlement Potential?

Zoning analysis is the first filter that determines whether a parcel can support your intended use. You need to confirm the current zoning classification, identify what uses are permitted by right versus conditional use, and determine whether a rezoning or variance will be required. Failing to verify zoning early can result in months of delays and tens of thousands in legal and application fees.

Start by pulling the official zoning map and ordinance for the jurisdiction where the parcel is located. Look beyond the basic use classification. Pay attention to density limits (units per acre), height restrictions, setback requirements, parking ratios, open-space mandates, and any overlay districts that may add additional regulations. For subdivision projects, check minimum lot sizes, frontage requirements, and road design standards.

Next, review the jurisdiction's comprehensive plan or future land-use map. Even if the current zoning supports your project, a comprehensive plan that designates the area for a different use can signal political resistance to your development. Conversely, a comprehensive plan that aligns with your project gives you leverage during the approval process.

Meet with local planning staff early. Most planning departments will provide a pre-application conference where staff reviews your concept plan and flags potential issues. This meeting is invaluable because it reveals whether your project will face opposition from staff, what conditions they may impose, and how long the approval timeline is likely to be.

For developers pursuing subdivision projects, understanding the entitlement timeline is critical for structuring financing. Our guide on how to develop a subdivision covers the full entitlement-to-construction sequence, and our real estate entitlements and zoning guide goes deeper on the regulatory process.

What Environmental Assessments Are Required?

At minimum, a Phase I Environmental Site Assessment (ESA) is required for any land acquisition involving lender financing. This assessment, conducted under ASTM E1527-21 standards, evaluates the property's history and current conditions to identify Recognized Environmental Conditions (RECs) that could indicate contamination. A Phase I ESA typically costs between $2,000 and $5,000 depending on property size and complexity, according to Aegis Environmental.

If the Phase I identifies potential contamination, a Phase II ESA becomes necessary. This involves actual soil and groundwater sampling and can cost $5,000 to $30,000 or more depending on the scope of investigation required. Phase II findings determine whether remediation is needed and what it will cost - a figure that can range from a few thousand dollars for minor contamination to millions for industrial sites.

Beyond the standard ESA process, developers should investigate several additional environmental factors:

• Wetlands: A wetland delineation identifies jurisdictional wetlands that may limit buildable area. The U.S. Army Corps of Engineers regulates wetlands under Section 404 of the Clean Water Act, and filling wetlands requires a permit that can take 6 to 18 months to obtain. Mitigation costs typically run $50,000 to $150,000 per acre of impact.

• Endangered Species: If the site is within the range of a listed species, a biological survey may be required. Habitat conservation plans can add significant cost and delay.

• Floodplains: Confirm FEMA flood zone designations. Development within a 100-year floodplain triggers additional permitting requirements and may require elevation certificates, flood insurance, or compensatory storage.

• Cultural Resources: Some jurisdictions require archaeological or cultural resource surveys, particularly for larger parcels or areas with known historical significance.

How Do You Assess Site Development Costs During Due Diligence?

Site development cost assessment is where many first-time developers make their most expensive mistakes. The goal during due diligence is to develop a realistic cost estimate for converting raw land into buildable lots or pads, accounting for grading, utilities, roads, stormwater management, and any required off-site improvements. Underestimating these costs by even 15% to 20% can erase your entire profit margin.

Start with the geotechnical investigation. A geotechnical report, which costs $1,000 to $5,000 for most parcels, tells you what lies beneath the surface. It identifies soil bearing capacity, groundwater depth, rock presence, and potential issues such as expansive clay or organic soils that require special treatment. For large subdivision sites, plan on $3,000 to $10,000 for a comprehensive report with multiple borings.

Next, get preliminary cost estimates for the following site work categories:

• Mass grading and earthwork: The single largest variable. Rocky sites or sites with significant elevation changes can cost two to five times more than flat, clean sites.
• Roadway construction: Including base, paving, curb, gutter, and sidewalk. Standards vary widely by jurisdiction.
• Water and sewer extensions: Confirm tap fees, connection charges, and whether you need to extend mains to the site.
• Stormwater management: Detention or retention ponds, bioswales, or underground systems. Regulations have become more stringent in recent years.
• Dry utilities: Electric, gas, telecom, and fiber. Coordinate with each provider to understand cost-share arrangements and lead times.

Use our commercial mortgage calculator to model how different site development costs affect your total project budget and debt service.

Need financing for a site with significant development costs? Clearhouse Lending structures horizontal construction loans that cover both land acquisition and site development in a single facility. Schedule a consultation to review your project budget.

What Title and Survey Issues Should You Watch For?

Title and survey problems are among the most common deal-killers in land transactions, and they are almost always discoverable during due diligence. The key is ordering the right reports early and having qualified professionals review them. An ALTA/NSPS land title survey costs $2,500 to $10,000 depending on property size and complexity, and it is money well spent.

The title commitment, issued by a title insurance company, reveals the current state of ownership along with all recorded exceptions. Review it carefully for the following issues:

• Liens and encumbrances: Unpaid property taxes, mechanic's liens from prior construction, or mortgage liens that the seller must clear before closing.
• Easements: Utility easements, access easements, and conservation easements can significantly restrict where you can build. Map every easement onto your site plan to visualize the impact on developable area.
• Restrictive covenants: Deed restrictions imposed by previous owners or homeowner associations may limit density, building height, or permitted uses.
• Chain of title gaps: Missing conveyances or improperly recorded documents can cloud title and require quiet title actions that take months to resolve.
• Mineral rights: In many states, mineral rights can be severed from surface rights. If a third party owns mineral rights beneath your site, they may have the legal right to access the surface for extraction.

The ALTA survey supplements the title commitment by physically locating boundaries, easements, improvements, and encroachments on the ground. Discrepancies between the survey and the title report must be resolved before closing. Common issues include fence lines that do not align with legal boundaries, structures that encroach into easements, and access roads that cross neighboring properties without recorded easements.

How Long Should the Due Diligence Period Last?

For raw land intended for development, a due diligence period of 60 to 120 days is standard, with extensions possible for complex sites requiring governmental approvals. The timeline depends on property size, complexity, and jurisdiction, but developers should resist pressure to shorten the period below what is needed to complete all critical investigations.

Here is a realistic timeline breakdown for a typical subdivision or commercial development site:

• Days 1-14: Order title commitment, ALTA survey, Phase I ESA, and geotechnical report. Begin desktop research on zoning, flood zones, and utility availability. Schedule pre-application meeting with planning department.
• Days 15-30: Receive and review preliminary title work. Conduct site inspections. Receive Phase I ESA results. Identify any issues requiring Phase II investigation.
• Days 31-60: Receive geotechnical report and ALTA survey. Compile preliminary site development cost estimates. Confirm utility capacity and connection costs. Review all findings against the development pro forma.
• Days 61-90: Resolve outstanding title issues. Complete any Phase II environmental work. Finalize the development budget. Make go or no-go decision.
• Days 90+: If entitlements are not yet secured, negotiate an extended study period or entitlement contingency that allows you to continue the approval process before being obligated to close.

The due diligence period should be long enough to complete all investigations and short enough to keep the seller engaged. In competitive markets, developers often offer a larger earnest money deposit in exchange for a longer study period.

For large subdivision projects requiring rezoning or planned unit development (PUD) approval, the entitlement process alone can take 6 to 18 months. In these situations, experienced developers negotiate a separate entitlement contingency period that extends beyond the standard due diligence window.

What Are the Biggest Red Flags During Land Due Diligence?

The biggest red flags during land due diligence include undisclosed environmental contamination, unresolvable title defects, inadequate utility capacity, and zoning restrictions that prevent the intended use. Identifying even one of these issues early can save you from a catastrophic investment. According to the Site Selection Group, many of the most damaging issues are the ones developers overlook because they assumed infrastructure or regulatory conditions were favorable.

Here are the red flags that experienced developers watch for:

Immediate Deal-Killers:

• Phase I ESA identifies recognized environmental conditions with potential remediation costs exceeding the land value
• Zoning does not permit intended use and comprehensive plan does not support a rezoning
• Title defects that cannot be cured (competing ownership claims, unresolvable boundary disputes)
• Protected wetlands or endangered species habitat covering a significant portion of the site
• No feasible utility connection within a reasonable distance or budget

Serious Concerns Requiring Further Investigation:

• Soil borings reveal expansive clay, high water table, or shallow bedrock that significantly increases construction costs
• Flood zone encroachment on a portion of the site
• Adjacent land uses that may create opposition to your project (schools near proposed commercial, residential near industrial)
• Seller unwilling to extend the due diligence period when legitimate issues need more time to evaluate
• Frequent ownership changes or below-market pricing with no clear explanation

Financial Warning Signs:

• Site development costs exceed original budget estimates by more than 20%
• Utility tap fees and connection charges not included in seller's representations
• Required off-site improvements (road widening, intersection upgrades, sewer extensions) that the jurisdiction will require at developer expense
• Impact fees or proffers that the jurisdiction has recently increased or plans to increase

For developers looking at how to structure financing around these risks, our land acquisition financing guide explains how lenders evaluate land deals and what contingencies they expect to see in the purchase contract.

Frequently Asked Questions

How much does a full land due diligence process cost?

A full due diligence process for a development site typically costs $15,000 to $50,000 or more, depending on property size and complexity. Major cost components include the ALTA survey ($2,500 to $10,000), Phase I ESA ($2,000 to $5,000), geotechnical report ($1,000 to $5,000), legal review ($3,000 to $10,000), and various specialty studies. While this sounds expensive, it represents a fraction of the overall project cost and can prevent losses many times greater.

Can I do land due diligence myself or do I need consultants?

Some desktop research - such as zoning verification, flood zone checks, and tax record reviews - can be done by the developer directly. However, the ALTA survey, Phase I ESA, geotechnical report, and legal review all require licensed professionals. Lenders will not accept self-performed assessments for these critical items. The developer's role is to manage the process, coordinate the consultants, and synthesize the findings into a decision.

What happens if I find problems during due diligence?

If you discover issues during the due diligence period, you generally have three options. First, you can negotiate with the seller to address the problem - either by reducing the purchase price, having the seller cure the issue before closing, or providing a credit at closing. Second, you can accept the risk and adjust your development budget accordingly. Third, you can exercise your right to terminate the contract and receive a refund of your earnest money deposit.

How does the due diligence period differ for raw land versus improved property?

Raw land due diligence is typically more extensive and takes longer than improved property due diligence. With raw land, there is no existing building to inspect, but the unknowns are greater - soil conditions, environmental history, utility availability, and entitlement risk all require investigation from scratch. Improved property due diligence focuses more on building condition, lease analysis, and operating history. Raw land due diligence periods commonly run 60 to 120 days, while improved property periods are often 30 to 60 days.

Should I get a Phase II environmental assessment even if the Phase I is clean?

In most cases, a clean Phase I ESA is sufficient and a Phase II is not necessary. However, if the property has any history of industrial use, fuel storage, or agricultural chemical application, a Phase II provides additional assurance. Some developers order a limited Phase II on higher-risk sites even when the Phase I does not formally recommend one.

What is the difference between a boundary survey and an ALTA survey?

A boundary survey identifies property lines and corners but provides limited additional information. An ALTA/NSPS land title survey meets specific national standards and includes detailed mapping of easements, rights-of-way, encroachments, improvements, utilities, and access points. For development purposes, an ALTA survey is strongly recommended because it provides the comprehensive information needed for site planning, title insurance, and lender requirements. Use the commercial bridge loan calculator to estimate financing costs during your due diligence and pre-development period.