You’ve received the green light to build a satellite church or add a new building on your school’s growing campus. The next step is finding a site that suits your needs. Where you choose to build is as important as what you’re building.
Why Due Diligence is Important
Land itself can have a wide range of issues that makes it unsuitable for your build or increases costs at every phase of your build and your occupancy. In addition, traditional property insurance policies generally exclude the land that buildings and other structures sit upon.
“Land issues that crop up during the build that are linked to things like environment contamination from heavy farming, a history of industrial use, or even easement-related problems, generally wouldn't be covered by your property or liability policy,” said Brandon Lemberg, a manager of property claims for Brotherhood Mutual.
He notes that such perils are typically only covered by specialty policies, such as environmental, pollution, or flood policies. “When you do your due diligence early in the buying process, you can protect your ministry—and its financial resources—from harm.”
Below are key questions to ask during the site selection process that help future-proof your building project by avoiding costly problems during the construction phase, or maybe even years later.
Scoping Out the Problem Areas: Natural Disasters
Flood zones, hurricanes, and wildfires pose costly threats, so don’t let your ministry fall victim by unknowingly purchasing property in a known problem area. Being in an area prone to natural disasters can often mean higher insurance costs and additional building requirements to mitigate potential damage.
Ask: Am I purchasing property in a designated flood zone?
Before purchasing property, it is crucial to determine whether the land is in a flood zone. Start by checking the online flood zone map offered by the Federal Emergency Management Agency (FEMA).
Additional flood-related questions:
What are the typical costs and coverage limits of flood insurance from the National Flood Insurance Program?
What natural or man-made barriers are in the area to help control flooding and is the community well prepared for flooding disaster and recovery?
Ask: Has the site been affected by hurricanes in the past?
FEMA provides an online hurricane map that shows the likelihood of experiencing a hurricane in a given area. The map also shows expected annual loss based on hurricane frequency. Note that building in a hurricane zone requires structures to adhere to special building codes and regulations, which can add to the overall cost.
Additional hurricane questions:
What is the elevation of the property?
Is the property near evacuation sites and are shelters nearby?
How resilient were public utilities, like electricity and sewage, for past events?
Ask: What’s the potential for wildfires near my chosen site?
Properties in wildfire or hurricane-prone areas require special consideration. Building in these zones often means adherence to strict building codes designed to withstand such disasters. The USDA Forest Service offers an interactive tool to help identify high-risk areas and understand the necessary precautions.
Additional wildfire questions:
Site History:
Do Some Digging
The potential for a natural disaster isn’t the only consideration. Contamination, pollution, or other environmental issues left by the previous property owners can cause trouble. Take extra steps to understand the site's soil and groundwater conditions to ensure that you don’t have to clean up someone else’s mess.
“You’ll run into the most issues with your property in urban redevelopment areas,” said Robert Silber, a senior risk control specialist for Brotherhood Mutual. “Older buildings are more likely to have had more uses—and problems—that are not immediately apparent.”
Ask: Who owned the land previously and how was it used?
Silber explains that, depending on past usage of the property, the soil could be contaminated with chemicals, including pesticides, lead, asbestos, and petroleum products. You can find property records, previous owners, and transfers from your county tax assessor's office or recorder's office. “Neighbors may also be able to give
you insight on your prospective location,” he said.
Ask: Who should I talk to about scheduling a soil sample?
If a check of the property’s historical records reveals that contaminants could be a concern, hire a professional to take soil samples. Contact a certified, local soil engineer—also known as geotechnical engineer—to test your soil.
The local zoning and planning department or the local health department can provide help.
Infrastructure: Who (or What) is Your Neighbor?
It’s important to know how nearby infrastructure affects the site. Rail lines, industrial parks, and chemical manufacturing plants have the potential to cause chemical spills and additional pollution concerns. Environmental features, like nearby rivers, can result in flooding.
“As part of the lot’s overall cost, be sure to factor in how you plan to address pre-existing structures, large boulders, heavy timber, or ponds on the property,” said Silber. “These can increase the cost of developing the land to make it acceptable to build on.”
Ask: What is the zoning classification of the property?
Zoning and land use regulations determine how a property can be used and what types of structures can be built. It is essential to ensure that the property is zoned for your intended use. Consulting with local planning and zoning departments can provide clarity on the regulations and any potential restrictions.
Ask: How might future developments nearby affect the site?
Lemberg suggests checking your local zoning laws to learn about what buildings may be going in nearby in the future. “If the site is located next to an empty lot or in an up-and-coming area, expect new development.” It may be good to look for property elsewhere if areas nearby are zoned for industrial purposes.
Ask: How could current structures on the property affect the cost?
Expect additional costs if you intend on demolishing or repairing buildings or other structures on the lot. Those costs can skyrocket if the structure contains asbestos or lead.
Additional infrastructure questions:
What are the setback and height requirements for the property?
Are utilities such as electrical, sewer, natural gas, and internet service in place?
Contractual Provisions:
Avoid Post-Purchase Blues
During the contract phase, be sure to include specific provisions that allow you as the purchaser to terminate the transaction with minimal or no loss if certain contingencies cannot be satisfied.
Ask: What approvals and permits are required for the intended use of the property?
Include provisions that define the results that must be achieved and the rights of the parties if those results are not met. Examples of provisions include city and county permits for building, soil and other inspections and tests, and the potential need for court approval if the title of the property is not clean. Your specific area may warrant additional provisions.
