Due diligence: what to check before the deposit

Due diligence is a race between the money a developer spends investigating and the deposit they stand to lose.

That makes the order it runs in more important than its thoroughness. The cheapest checks that can kill a deal go first.

Run the deal breakers before the detail

1. Title and encumbrances, including easements, covenants and caveats.
2. Planning controls, meaning what the zone and overlays allow.
3. Services, and whether capacity exists at the boundary.
4. Contamination history, from previous uses on and beside the site.
5. Access, both legal and practical, for construction and afterwards.

Each of those can end a deal on its own. A soil test before a title search spends money on a site somebody else may control.

An easement moves the building, or stops it

A sewer easement across the middle of a site can remove the yield entirely, and it appears on the title for anybody who looks.

This is the single cheapest check available and the one most commonly left to the lawyer after exchange.

Services capacity is not the same as services presence

A main in the street does not mean capacity for forty apartments. Authorities answer that question directly, and the answer can require an upgrade the developer funds.

Asking early turns a potential surprise into a line in the feasibility, where it belongs.

Contamination follows the history, not the appearance

A tidy site with a service station two doors down has a history worth reading. Previous uses, not current condition, drive the risk.

A preliminary investigation costs little beside a remediation nobody priced, and it names whether the next stage is needed.

Read the neighbours as carefully as the site

Overshadowing, overlooking and objection history all shape what a planning authority will accept.

A site next to an active objector is a longer approval, and our guide to holding costs prices what those extra months take.

Write the findings against the feasibility, not into a folder

Each discovery either changes a number or it does not. A report read once and filed changes nothing.

A checklist tied to the feasibility lines keeps the connection, so a services upgrade lands in the budget the day somebody learns of it.

Decide the walk away point in advance

A developer who has spent money investigating becomes reluctant to stop, which is exactly when a clear number helps.

Naming the land price that works, before the emotion of a deal, is the whole purpose of the residual calculation.

A price that only works with every assumption holding is a price to decline. The site will still exist next year, usually at a number that works.

Survey early, because boundaries surprise people

An identification survey confirms where the boundaries actually sit, which is not always where the fences suggest.

Encroachments, adverse possession and a setback measured from the wrong line all change yield, and all are cheaper to find before exchange.

Use the due diligence period, do not assume it

A contract with a short or conditional period sets the real timetable, and the investigations have to fit inside it.

Ordering reports in parallel rather than in sequence is usually the difference between finishing the work and waiving a condition blind.

A seller's own reports are a starting point rather than an answer. Somebody else commissioned them, with a different question in mind.

What to change first

• The five deal breakers run before any detailed investigation
• Title and easements get read first, because they cost almost nothing
• Services capacity gets confirmed by the authority, not assumed
• Contamination risk follows the site's history, not its appearance
• Every finding lands on a feasibility line the same day
• The walk away price exists before the negotiation does