Basics of Due Diligence on an Agricultural Parcel

Are you trying to learn more about a parcel of land before renting or buying? This guide will help you get started.

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Are you trying to learn more about a parcel of land before renting or buying? Or are you researching the land you are currently on before beginning a new farm endeavor? Wherever you’re coming from, understanding if a piece of land is right for your farm business goals is an important undertaking. We’re here to help you get started.

The process of researching whether a specific piece of land will meet your needs (from a legal perspective) is called “due diligence.” In this guide, we will go through some of the questions any farmer or rancher will want to explore in due diligence research and the rationale behind those questions. Should you want more thorough support in conducting due diligence on your own at the end of this guide, we recommend reading our guide, Navigating Due Diligence on an Agricultural Parcel.

How can due diligence research increase my resilience?

Land is enmeshed in a network of relationships. Farmers and ranchers are attuned to many of these relationships, such as which crops thrive in the soil, where the water flows, and what the neighbors are like. Buying or renting land may also bring relationships with banks, landlords, and/or investors. And, importantly, there are legal relationships: boundary lines, easements, additional leases, and other uses or access legally permitted or disallowed on the land.

These legal relationships are the easiest to forget when moving forward with a new land project. Imagine you’re looking for land to rent or buy. You’ve just visited a property within your price range. The location is great, the soil is rich, and there’s already a storage shed on site. You’re thrilled! This is a hard moment to remember to pump the brakes and ask, “Do the easements, boundary disputes, or zoning prohibitions here support my future vision for this land?” Or perhaps you’ve been on your land for years, but you have an exciting grant opportunity that could help you build the workshop space of your dreams. Do the legal characteristics of your land support the new project?

These are the questions that due diligence requires. Knowledge is power. The information you gather through due diligence will empower you to make a decision that is truly in service of your dreams and goals—even if that decision means walking away from land that initially looked perfect for you or deciding to petition the zoning board to allow a project on your land.

Below, we offer some questions that can guide your due diligence research. Whether you are looking to buy land, lease, or understand the land you already own, the questions below will help you find a path forward that is in line with your business priorities. We recommend reading through the explanation for each question. Afterward, use the prioritization exercise to help you identify which questions you want to begin researching as you do your due diligence. 

Ask the right questions

Will the zoning code allow me to do what I want on this land?

Generally, the zoning map of a town, city, or county will section the area into zones of use. There are accompanying rules (usually called the zoning code or land use ordinances) set by the local governing body that describe what kinds of uses are allowed or disallowed in each zone. The idea here is that parcels of land near each other are restricted to certain uses or activities that are compatible—for example, allowing houses, schools, and parks in a residential zone but keeping noxious factories in a manufacturing zone. Even if the land you hope to use is in an agricultural zone, you may find that the ordinance disallows or does not explicitly permit non-farm activities, such as weddings, workshops, Airbnb, or festivals. In that case, you may need to seek a variance or special use permit from the zoning board or, alternatively, advocate for changes to the code. Deciding to buy or rent land with a zoning code that is ambiguous or incompatible with your dreams is a matter of personal risk assessment. Moving forward with a project on your land that is not explicitly allowed in your zoning code is a risk some farmers can tolerate while others cannot. For support navigating zoning questions, read Strategies for Navigating Zoning Codes and Challenges.

Where are the property lines?

Before planning any modifications or construction on your property, it is important to know where the property lines are. Any construction or changes to the property will need to comply with setbacks (the area between a structure and the property line in which building is prohibited). Accessing an updated survey from the land records office—or hiring a surveyor yourself—is the best way to ensure you know where the property lines are. This can be especially helpful in rural sites where the property lines are often not clearly marked or questioned.

Once you know where on the physical earth the property line falls, you can more easily spot issues that might lead to conflict, decreased property value, or liability issues down the road. For example, a neighbor may have unintentionally built a shed on your property, thinking the boundary line was in a different place. Their continued use of that shed or building could spell liability issues you’ll want to be aware of before moving forward. On the flip side, you may see the perfect area to raise mushroom logs or set up an agroforestry system—but that spot may be split between the property in question and the neighboring property. If so, you will want to know this! However, confidence in boundary lines is the exception rather than the rule. Usually, there is no updated survey on file, and hiring a surveyor is not in the budget. Many landowners (prospective and current) depend on existing markers like tree lines, fence lines, and the impressions of neighbors. Yet, as many farmers find out years later, these guidelines may not be accurate. Property boundaries are often an exercise in risk management. If the property line isn’t exactly where you think it is, how will that affect your revenue potential and quality of life? 

Am I comfortable with the neighbors?

While not specifically a legal relationship, assessing your compatibility with the neighbors is a critical part of due diligence! You may be unable to meet the neighbors before committing to a purchase or lease, but don’t let that stop you from discovering what you can. Is there signage on their property that gives you concern? Are there indicators of chemical use that might impact your own operation through chemical drift? Is there loud machinery on the property? Or other influences that may interfere with your business plans and/or quality of life, such as sewage, runoff, or frequent traffic? This research is tricky because, ultimately, you are judging a book by its cover. Paying attention to how you feel about what you learn about the neighbors and assessing if you need more information before moving forward will help you feel confident in whatever decision you make. 

Are other people using the land?

This is an important question to dig into because it will help you assess where you might find yourself in a legal battle down the road. The best way to gather information here is to walk the property thoroughly, making notes of any places where you notice signs of human activity. Are there signs that someone has been dumping garbage in the backwoods? How about old gardens, tire tracks, or signs of clear-cutting? It is very possible that the current owner knows the history of all the activities you see. But where they don’t, more research is needed. There may be undocumented agreements with the neighbors or illicit land use that could spell liability issues and land disputes for you later. For more information about the legal risks of unauthorized land use, read our guide, Navigating Due Diligence on an Agricultural Parcel

Are there any easements on the property?

Most land is encumbered in some way, meaning there is a legal agreement that gives people other than the landowner(s) access to the land or limits what the landowner(s) can do with their land. Easements are one of the most common types of encumbrances. For example, many properties will have utility easements that allow utility companies to access parts of the property to maintain pipes, cables, wires, etc. This might involve moving earth, razing structures, or spraying chemicals. Many farm properties may also be subject to conservation easements, which preserve the land for agricultural use but may make it difficult for farmers and ranchers to do any development on their property that is not strictly agricultural (such as building a workshop space). It’s good to know where these easements are on your property and the specific terms of the easements when committing to a land project, lease, or purchase.

Easements are generally documented at the county land records office (or your local equivalent) and available for you to review in person or online. For more information about conducting due diligence using county land records, read Navigating Due Diligence on an Agricultural Parcel

Identifying the next step

Due diligence is all about seeing if the land’s legal character matches your goals. This means doing research to identify the costs, benefits, and responsibilities associated with the intended parcel and balancing them with your uses, now and in the future. To that end, it might be helpful to connect with what, specifically, you are doing or hope to do with land!

Try this:

Due diligence is all about seeing if the land’s legal character matches your goals. This means doing research to identify the costs, benefits, and responsibilities associated with the intended parcel and balancing them with your uses, now and in the future. To that end, it might be helpful to connect with what specifically you are doing or hope to do with land!

Try this: Take 5 minutes to write down everything you are doing or think you might want to do on the land.

  • Do you want to expand the fields or pasture space in the future?
  • Build new structures?
  • Are you hosting workshops, AirBnb guests, or other forms of agritourism?
  • If you own or plan to purchase land, will you pass the land on to your family, or do you hope to sell it when you retire?

 Once you have your list, go through each item and place a star next to the plans/dreams that feel most critical to you. In other words, highlight the items on your list you would not sacrifice, perhaps because they are vital to your profitability or are central to your quality of life.

 With your list prioritized, you’re ready to do more research!

 Identify 1-2 questions below that feel crucial to answer to support your priority plans:

  1. Will the zoning code allow me to do this activity?
  2. Where are the property lines for where I want to conduct this activity?
  3. Am I comfortable with the neighbors? Will they be comfortable with this activity?
  4. Do other people have access to the land where I want to conduct this activity?
  5. Are there any encumbrances on the land that would interfere with this activity?

Moving Forward

  1. Are you ready to conduct the due diligence process on your own? If so, use these questions to guide your research.
  2. Do you want to learn more about conducting the due diligence process on your own, including research techniques and processes? Head to Navigating Due Diligence on an Agricultural Parcel for more information.
  3. Do you specifically want to address issues of zoning? Read Strategies for Navigating Zoning Codes and Challenges.
  4. Do you want to contact an attorney with land use expertise to conduct the due diligence process for you? If so, you have some research to do if you don’t already know an attorney with this kind of experience. The best place to start is asking local advisors and peers for referrals. Consider reaching out to your extension agent to see which attorneys they can recommend. Also reach out to other producers who are doing similar activities on their properties that you hope to be doing, particularly if they are in a similar area/zone as you.