Auction-listed industrial parcels often come with irregular property conditions that can significantly impact value, usability, and cost of ownership. These conditions arise due to factors like tax delinquency, neglect, insolvency, or forced sales. Understanding these risks is essential for effective due diligence and post-acquisition planning.
Here are the most common property conditions associated with industrial land sold at auction:
1. Deferred Maintenance or Structural Deterioration
- Unmaintained Infrastructure:
Roof damage, cracked foundations, rusted steel frames, or outdated facades are common, especially in abandoned facilities. - Non-functional Utilities:
Inactive or disconnected power, water, sewage, or gas lines may require full restoration. - Roof and Drainage Failures:
Blocked gutters, collapsed roofing sections, or inadequate slope design can lead to water intrusion and asset decay. - Dilapidated Ancillary Structures:
Loading docks, storage sheds, or equipment pads are often unsafe or non-operational.
2. Environmental Hazards and Contamination
- Surface and Subsurface Pollution:
Old industrial sites may have soil contamination, leaky underground storage tanks (USTs), or chemical residue from former operations. - Asbestos and Lead Risks:
Older buildings might contain asbestos insulation or lead-based paint, requiring regulated removal. - Brownfield Conditions:
The property may be flagged by local or federal agencies as a brownfield site, triggering remediation obligations or usage limits.
3. Code Violations and Permit Issues
- Unresolved Building Violations:
Illegal additions, expired permits, and failure to meet fire, electrical, or zoning codes are common. - Non-compliance with Zoning Use:
Past operations may not align with current zoning laws, risking penalties or limitations on future redevelopment. - Condemnation or Demolition Orders:
Some properties may already be marked for partial or full demolition due to safety risks.
4. Encroachments, Access, or Utility Constraints
- Landlocked Parcels:
Some industrial plots lack legal access to public roads, utilities, or right-of-way easements. - Encroachment Disputes:
Fencing, parking lots, or utility lines may extend over property lines, leading to potential boundary conflicts. - Lack of Utility Connections:
Sites may lack municipal water/sewer lines, requiring private wells, septic systems, or off-grid solutions.
5. Legal and Title Complications
- Clouded or Unmarketable Title:
Auction parcels may still carry IRS liens, unpaid special assessments, or judgment claims that aren’t extinguished atthe sale. - Possession Issues:
The property could be occupied by tenants, squatters, or abandoned materials, requiring eviction or cleanup. - Survey or Parcel Irregularities:
Lot lines may be undefined, misaligned, or split across zoning districts, complicating development.
