The “Due Diligence” Period, Part II

by Geoffrey Butler, AIA

A continuation on last week’s due diligence discussion.

Hazardous wastes – Has an environmental assessment been completed on the site? Are there hazardous wastes on site which must be removed? At what cost?

Soil Investigation – What are the soil conditions on site? Is there solid rock six inches below grade? Is the soil stable or subject to expansion? Is there adequate bearing capacity for the soil? What is the impact of the soil on the construction of the foundation system? Does this mean extra cost over normal construction processes?

Site Design – Can the site support the project needs? Given all the site limitations, can the site support the project and all required parking? Does the site allow for the type of design and character which the Developer desires?

Architectural Control – Are there covenants in place or ordinances which dictate the design of the project or otherwise affect your design freedom? What are they and what process must be used to secure approval of what you want to do? How long will it take? Many times, it is wise to secure the approval of the design from this Committee prior to closing on the property. There is no reason to buy a piece of property and then find that you can’t put your typical building there because it doesn’t meet someone’s subjective opinion of appropriate design.

Building Permits – What are the local building codes? How do they impact your project? How long does it take to secure a building permit? What fees are attached to the permitting process. How do they handle the inspection process during construction? Do they require special or extraordinary inspections on a regular basis? Do they require the contractors to be locally licensed?

All of the above issues must be addressed to the satisfaction of the Buyer in order to make a final determination whether to complete the purchase of the property. The Architect must investigate each and every one of the above issues and attempt to provide the Buyer all the necessary information to make a judgment whether to proceed with the project. The purchase might need to be delayed until many of the approvals from local agencies or control committees are secured.

This due diligence period is a critical period in the development of a project and one that cannot be overlooked. The due diligence period can identify unusual costs and processes which will affect the project’s viability.