January 1, 1900

Donald R. Daines

Due diligence and site investigation have become even more critical to residential developers with the ever-increasing pressure to "steer" new homes towards the more developed communities. While smaller residential "in-fill" projects have always been an excellent opportunity for homebuilders, in order to meet the projected housing needs larger projects with higher densities will be required in those areas targeted for growth under the various policies, programs and plans being devised and implemented by the State.

Because new residential developments in these more urban or suburban areas will be surrounded by older, more established communities than normally encountered by builders, the scope and depth of the pre-closing and pre-development investigations must be expanded. While due diligence investigation will continue to examine physical and non-physical (i.e., legal, zoning, etc.) constraints on the land to be developed, the need for exhaustive, accurate and complete investigation is greatly increased in more urbanized settings.

Where the density of new residential projects will be greater than historically allowed by the less densely populated municipalities, there will be less room within the site to make field adjustments in order to accommodate unexpected site conditions discovered during development. Making midstream adjustments due to undiscovered physical or legal constraints will be much more costly, and may even jeopardize the underlying approvals given the limited flexibility in revising the site plan layout. The greater intensity of uses of the already developed properties surrounding the proposed new development also makes it important to investigate these surrounding properties to see if the site layout must be adjusted to minimize any adverse impact.

Expanded Zoning Review

The zoning of the surrounding properties must also be examined to determine the possible permitted uses that could impact the proposed project. While evaluating the zoning as applied to the subject property has always been fundamental, the close proximity of high intensity uses makes it necessary to expand the investigation to surrounding properties, possibly even going so far as to reviewing any pending site plan or subdivision applications before the planning or zoning boards that need to be disclosed to potential purchasers of homes within the new development.

Infrastructural Considerations

Assessment of existing infrastructure and utilities (sewer, stormwater, potable water, electric, street circulation, etc.) is critically important in more urbanized areas because of the greater limitation upon the ability to install new or expanded systems or connections. The developer must determine not only existing capacities of all utilities serving the proposed development, but must also discover any current deficiencies or problems (i.e., infiltration and inflow of stormwater into the sanitary sewer system) that might need to be corrected before the new project could be approved or occupied. Meeting with the engineers of the municipality and any utility authority is essential to learn the timing and nature of any planned repairs or expansions, and how their costs are to be allocated and assessed.

If the new residential project requires expansion or installation of new utilities or roads, it becomes even more critical to determine whether the new or expanded facilities are located entirely within public property or rights-of-way. Given the higher density of land development surrounding the proposed project, it is essential to identify and estimate the cost of any easements or other rights-of-way that might be needed across private property for such utilities as sanitary sewer or water. One item often overlooked, but which may prove costly, is the need to acquire a site triangle easement across an adjoining property for the entrance to the proposed project.

Title Issues

The title search and examination of the property to be developed is also more critical in a more urbanized setting because it is likely that other properties have acquired rights (such as easements) across or under the subject property. Reading the detailed language of any easement or other encumbrance on the property is very important in determining exactly what rights or limitations have been imposed on the property to be developed, and which therefore have to be incorporated into the site plan.

Environmental Considerations

While environmental issues affecting properties are always of utmost importance, in a more urban setting, environmental impacts caused by contiguous and surrounding properties should be examined even more closely (e.g., groundwater contamination, "no further action letters" from the Department of Environmental Protection, and compliance with any remediation plan).

Assembling A Good Team Is Critical

Developing residential projects within a largely developed area, or as an "in-fill" project, requires a greater degree of investigation, assessment and pre-planning not only for the subject property, but also for the surrounding properties. The due diligence investigation requires a coordinated team of experts in engineering and land use law, as well as those skilled at assessing property rights. Depending upon the size of the project, it may be beneficial for the developer to explore the possibility of utilizing redevelopment laws to maximize the opportunity for land development within a more urbanized community.

Donald R. Daines is a partner of Hill Wallack and a member of the Land Use Division. He concentrates his practice in land use litigation, federal fair housing and related civil rights issues. His experience includes extensive litigation in state and federal courts.