Minor points can add up to major problems for developer

Any new property acquisition or physical expansion, by its very nature, will re-quire the assistance of various professionals knowledgeable in the area.

Thus, advice will have been sought from architects, contractors, surveyors, title experts, accountants, attorneys and perhaps others.

Hopefully, with all of this talent, the intended improvements will proceed without event. Unfortunately, in the real world, this is not always the case; and despite careful due diligence, unanticipated problems do seem to have a way of developing.

The following is a cursory review of some often overlooked areas that should be explored before embarking on a real estate venture.

Zoning and titling restrictions

The covenants, conditions and re-strictions of record affecting the real estate in question should be reviewed to make certain any limitations on the use of the land do not make the move or expansion difficult or impossible.

Is zoning adequate, both for current use and for activities that might be contemplated in the future?

Setback and building lines can create problems in connection with the expansion of a building, or the possible erection of an additional freestanding structure. One would hate to see a building removed or partially demolished simply because requirements of this nature had not been unearthed in advance.

Are deed restrictions, zoning and other municipal ordinances sufficiently broad so as to permit the size and nature of signage contemplated on the property? As in the case of building lines, re-moving offending signs could be expensive.

Is parking adequate under deed re-strictions and local requirements? In addition, be certain the required number of handicapped spaces are in place and are appropriately marked.

Will the proposed relocation or ex-pansion require new or additional licenses or occupancy permits? Would hours of operation be affected?

If additional employees are planned, make certain that immigration requirements are strictly followed.

Where subdivision trustees are in-volved and many times they are even in commercial areas the powers of these trustees should be reviewed, especially in the area of the trustees' ability to make assessments and to amend subdivision indentures.

Are future municipal or local projects possible which might impact on the planned expansion or relocation? Here one might consider street widening, condemnations, TIF developments and the like.

Survey

Easements should be studied to make certain their placement does not interfere with the proposed use of the land. One should especially be careful to review the instruments underlying common easements, easements that allow access to your property through adjoining land and those permitting access to adjoining property over yours.

Make certain there are no encroachments either by your property on that of a neighbor, or by a neighbor on yours.

Utility easements, both above ground and below, should be noted and located. One should be careful to assure nothing is built under, above or on such easements. Removal could be costly.

Environmental concerns

Investigate the use of the property by prior owners. Were any underground or above-ground storage tanks involved?

Have an inspection made of the entire property to make certain no hazardous materials had been used or stored. Re-member a phase I environmental survey tells little more than a drive-by appraisal. If there is any doubt, a more sophisticated study should be made.

Check for the use of asbestos as insulation. Often pipes have been bound with asbestos, especially in older buildings. Also, note the possible use of asbestos in ceilings and floor tiles.

Have any transformers, which might have contained PCBs, been used or stored on the property?

Financing

Consider the term of the loan to be involved. In today's economy one can hardly imagine interest rates becoming a great deal lower; nonetheless, a number of situations could develop in which short-term, rather than long-term, financing might be desirable. In such cases consider a short-term maturity with a longer amortization.

This would, of course, give rise to a balloon at the end of the term; however, it also would permit all provisions of the financing to be revisited at that time.

On the other hand, the stability and certainty of long-term financing with fixed, or formula-adjustable, interest rates can be desirable in many situations.

Regardless of the term one might select, it is prudent to have the loan documents provide for prepayment at any time without penalty. This way a sale of the property securing the loan could be affected without unnecessary additional cost.

Is there any possibility that, for estate planning purposes, ownership might be transferred to a revocable trust, family limited partnership or a limited liability company? If so, the loan documents should contain provisions ensuring such transfers do not trigger a due-on-sale clause.

Structural features

Make certain the floor is of sufficient strength to accommodate the type of machinery to be installed. Similar concerns should be considered in connection with ceiling heights.

Is the electrical service adequate to permit the operations intended on the premises?

Similarly, is the HVAC system adequate and environmentally efficient?

Is the building in conformity with the Americans with Disabilities Act? If not, are the necessary changes economically feasible?

A flat roof is one of the most difficult kinds to maintain. It should be inspected, both outside and within the building, for signs of leakage and other defects. If at all possible such inspections should be made after a heavy rain or snowfall.

Similar concerns arise if the building has a basement. Inspect the foundation and floors for signs of present or past water damage. Is the property in a flood plain?

Is the plumbing adequate to provide for such additional use and personnel as might be involved in the expansion?

Insurance

Is current insurance adequate to co-ver the proposed expansion or addition? The same concern arises as to any new machinery or equipment. Thus, fire and extended coverage protection should be reviewed.

Will the move or expansion involve increases in the extent or nature of the work to be performed on the premises? Will more personnel or visitors be in-volved? If so, public liability insurance should be reviewed for adequacy. Once a certain level of protection has been acquired a few thousand dollars in additional coverage is really not all that expensive.

When acquiring real estate, either by expansion or relocation, always and without exception obtain title insurance. The cost is relatively inexpensive, and, should title problems arise in the future, at least you will have someone available to work with you in finding a solution.

By no means is the foregoing intended to be all inclusive; however, it is hoped, the items which have been cited will not become areas of concern, at least not when properly considered and ad-dressed.

(Edgar T. Farmer practices in the Clayton office of Husch & Eppen-berger LLC, and is a former president of the Bar Association of Metropolitan St. Louis. The Missouri Bar Associa-tion provided this article.)