Conducting thorough due diligence before bidding on industrial land at auction is essential to identify environmental liabilities and zoning restrictions that could severely affect the property’s usability, cost of development, or resale potential. Since auction purchases are typically “as-is, where-is”, buyers assume all risks—including hidden contamination, code violations, or non-conforming uses—unless uncovered in advance.
Here are the key due diligence steps to confirm environmental and zoning issues before auction:
1. Zoning Verification and Land Use Compliance
- Check Current Zoning Designation:
Contact the local planning or zoning department to confirm the property’s zoning classification (e.g., industrial, commercial, agricultural). Ensure the intended use—such as warehousing, manufacturing, or hazardous material storage—is permitted by right or via conditional use. - Request the Zoning Map and Ordinance:
Review allowed uses, building restrictions, setback requirements, height limits, parking ratios, and buffer zone rules. - Look for Non-Conforming Use Notices:
If the property was being used for a purpose that doesn’t match current zoning, it may lose legal use rights upon sale or vacancy, limiting redevelopment options. - Check for Overlay Zones:
Confirm whether the site falls under environmental, floodplain, airport, historic, or hazardous materials overlays, which may restrict construction or trigger additional permits.
2. Environmental Risk Screening
- Perform a Phase I Environmental Site Assessment (ESA):
Engage a qualified environmental consultant to assess for past or present contamination risks, including USTs (underground storage tanks), chemical spills, and hazardous waste.
Note: This may not be possible pre-auction if access is restricted, so rely on public records as an alternative. - Search EPA and State Databases:
Review the property’s presence on lists such as the EPA’s Superfund (CERCLIS), RCRA, or state hazardous site inventories. - Aerial and Historical Use Review:
Use tools like Google Earth, Sanborn Maps, and historic land use records to determine if the property hosted gas stations, landfills, auto shops, or chemical plants. - FOIA/Public Records Requests:
File Freedom of Information Act (FOIA) requests with environmental agencies for past inspections, violations, cleanup orders, or spills.
3. Permits, Violations, and Code Enforcement History
- Request Open Permit Records:
Check with the local building department for any open or expired permits, stop-work orders, or code enforcement actions. - Review Utility and Infrastructure Conditions:
Determine whether the property has access to water, sewer, electricity, and roads, or if off-site upgrades would be required. - Look for Brownfield Designation:
Some industrial sites qualify as brownfields, which can mean cleanup obligations or, conversely, redevelopment incentives depending on the jurisdiction.
4. Title Search and Legal Encumbrances
- Run a Preliminary Title Search:
Look for recorded easements, deed restrictions, conservation areas, or utility covenants that may impact how the site can be used. - Check for Tax Liens or Government Encumbrances:
Outstanding municipal liens, environmental fines, or state cleanup costs may transfer with the property.
5. On-Site Inspection and Neighboring Property Context
- Visit the Site (If Allowed):
Visually inspect for signs of dumping, drum storage, staining, old tanks, distressed vegetation, or restricted access. - Observe Adjacent Uses:
Neighboring incompatible land uses, such as residential zones or water bodies, may affect future permits or public acceptance. - Interview Neighbors or Tenants (if any):
Locals may provide insight into past activities, pollution issues, or usage patterns.
