Hi, I’m Terry Strom. With over 25 years navigating the complexities of land development and permitting here in Southern California, I’ve seen firsthand the excitement that comes with finding what seems like the perfect property. Whether you’re a seasoned developer, a real estate professional guiding a client, or an investor looking for the next opportunity, that initial spark is undeniable.

But I’ve also seen the costly aftermath when that excitement overshadows crucial upfront research. California’s regulatory landscape is intricate. Diving into a purchase or lease without understanding the full picture – the zoning nuances, the potential permit hurdles, the environmental constraints – is one of the most significant financial risks you can take. Too often, inadequate upfront research leads to stalled projects, budget overruns, and ultimately, the inability to realize your vision. Avoiding development mistakes starts long before the first shovel hits the ground; it starts with rigorous due diligence.

That’s why I want to talk about “Entitlement Due Diligence.” It’s the essential, proactive step you should take before committing significant capital. Its purpose is simple but vital: to uncover the true development potential of a property and, just as importantly, identify the potential roadblocks before they become expensive problems. This post will guide you through the critical components of real estate due diligence in California, focusing on the entitlement and land use factors that are make-or-break for development success.

Understanding Entitlement Due Diligence vs. Standard Property Inspections

First, let’s clarify. When most people think of due diligence, they often picture standard property inspections – checking the foundation, the roof, the electrical systems. That’s crucial for existing structures, of course.

But Entitlement Due Diligence is different. It’s a deep dive into the complex web of government regulations, zoning codes, permit requirements, environmental sensitivities, and agency policies that dictate what you can actually build on a property and how challenging (and costly) that process will be. It’s about understanding the invisible framework that governs land use. For any land development feasibility study or pre-acquisition property analysis in California, this level of investigation isn’t just recommended; it’s fundamental.

The Essential California Entitlement Due Diligence Checklist

So, what does this deep dive involve? Based on my experience helping clients across Southern California, here are the key areas that can be investigated – think of this as your essential entitlement due diligence checklist:

  • Zoning Verification & General Plan Consistency: We don’t just look at the current zoning map; we dig into the details. What uses are permitted “by-right”? Which require a Conditional Use Permit (CUP) or other discretionary actions? We verify density limits, height restrictions, setbacks, and parking requirements – generating what amounts to a detailed zoning verification report. Critically, we also check how the zoning aligns with the local City or County General Plan, which signals long-term policy direction.
  • Uncovering Overlay Zones & Special Districts: Properties often lie within multiple jurisdictions or special zones that add layers of rules. We identify overlays like Coastal Zones (requiring Coastal Development Permits), Airport Land Use Compatibility Zones, historic districts, specific plan areas, and others. Each layer can significantly impact design, process, and cost.
  • Assessing Environmental Constraints: This is a huge factor in California. We conduct an initial assessment for potential CEQA (California Environmental Quality Act) documents – i.e., we check with the city or county planning department to see if the project will need an Exemption, Negative Declaration (ND), Mitigated Negative Declaration (MND), or a full Environmental Impact Report (EIR).
  • Infrastructure & Utility Capacity Review: When requested by the client, we can assess the availability and adequate capacity of essential utilities – water, sewer, electricity, gas.  Also, we can assess road access, if there might be potential traffic impacts, and whether significant (and costly) off-site improvements might be required by the jurisdiction.
  • Identifying Potential Discretionary Hurdles: Based on the zoning and your intended project, we assess the likelihood of needing discretionary permits like CUPs, Variances, Zone Changes, or General Plan Amendments. We analyze the potential complexity, typical timelines, and political sensitivity associated with these approvals in that specific jurisdiction.
  • Gathering Preliminary Agency Feedback (Optional but Recommended): Sometimes, a quick, informal inquiry or a formal pre-application meeting with planning or building staff can provide invaluable early insights into potential agency concerns or requirements.

Gambling on Assumptions: The Real Costs of Inadequate Due Diligence

Skipping or short-changing this process is like navigating a minefield blindfolded. The consequences can be severe:

  • Buying Unusable Land: Discovering too late that zoning, environmental constraints, or lack of utilities make your intended project impossible.
  • Budget Blowouts: Facing unexpected and potentially prohibitive entitlement fees, mitigation costs (e.g., for traffic or habitat), or extensive off-site improvement requirements.
  • Crippling Delays: Getting bogged down for months, or even years, in unforeseen permitting battles or environmental reviews, destroying project economics.
  • Failed Business Plans: Realizing your pro forma was based on faulty assumptions about what could be built, how quickly, and at what cost, potentially jeopardizing financing.

Simply put; to try to avoid development mistakes, it is best to invest in due diligence time and resources upfront to truly understand the property.

Turning Research into Results: Using Due Diligence to Your Advantage

The information gathered during thorough due diligence isn’t just about identifying problems; it’s about empowering informed decisions and creating strategic advantages:

  • Informed Go/No-Go Decisions: Make more confident choices about whether to proceed with an acquisition or lease based on a better understanding of the risks and opportunities.
  • Stronger Negotiations: Leverage findings about necessary entitlements, potential costs, or restrictions to negotiate a more favorable purchase price or lease terms.
  • Realistic Planning: Develop accurate project timelines and budgets from the outset, incorporating anticipated entitlement processes and costs.
  • Clear Entitlement Roadmap: Create a strategic plan for navigating the required approvals efficiently.

Invest in a Higher Level of Certainty

In California’s dynamic but demanding real estate market, thorough real estate due diligence, with a sharp focus on entitlements, isn’t a luxury – it’s a fundamental requirement for success. It’s about replacing assumptions with facts and decreasing risk through knowledge, to have a better understanding about the entitlement process for your project.

Navigating this complexity requires specialized knowledge and experience, especially given the variations across Southern California cities and counties.

If you need expert assistance with comprehensive entitlement due diligence, land development feasibility studies, or navigating the complexities of Southern California property development approvals, Strom Entitlement-Permitting Project Management is here to help.


Contact me today for a free 30-minute consultation. 

Terry Strom – Strom Entitlement-Permitting PM

300 Carlsbad Village Drive, Suite 108A-74 Carlsbad, CA 92008

(951) 970-7995 Terry@StromPermit.com