Denver, Colorado

Salt Lake City, Utah


 Buying a vacation home or rental property? Do your research

Buying a vacation home or rental property can be rewarding; however, it is critical to conduct thorough due diligence on the property before closing on the purchase.

The following are a few important matters to consider before buying a vacation home:

Title review

Review the title commitment and underlying documents to ensure the seller named in the purchase contract actually owns the property, and analyze matters of record which may affect ownership and use of the property. It is surprising how often buyers do not review their title commitments or assume a realtor or title agent has done so for them. I have encountered on more than one occasion, situations in which the person listed as the seller in the purchase contract is not the owner of record, and therefore, lacks the authority to sell the property. Or, situations in which the buyer wants to purchase a luxury vacation home and rent the property out when it is not being used, only to discover the restrictive covenants recorded against the property do not permit short-term rentals. Find out before you head to the closing table.

Survey review

Obtain a survey or improvement location certificate, as appropriate, to determine the accuracy of the property’s legal description and assess whether there are troubling physical conditions on the property. Without a survey, it would be nearly impossible to know if, for instance, a neighbor’s building was encroaching on the property or if the legal description in the purchase contract covers all of the property you intend to purchase. These problems can be costly and time consuming to remedy and should be addressed by the seller pre-closing.

Environmental testing

Depending upon the property, order a Phase I environmental report or conduct tests for matters of particular concern, such as lead-based paint or asbestos. For example, if you intend to demolish or renovate any portion of the improvements on the land, it is particularly important to know if remediation efforts must first occur (such as asbestos mitigation). If you proceed with construction work on a property that is contaminated, you may encounter significant penalties.


Review the property’s zoning and restrictive covenants to ensure the intended use will be permitted by the local municipality and any homeowners association or planned community in which the property is located. If you intend to place your property into a rental pool (particularly for vacation homes), or you wish to divide a residence into fractional ownership interests, it is critical to understand whether such uses are permitted or whether certain approvals will first have to be obtained.

Lender Due Diligence

If a lender is involved, confirm that their due diligence questions and requirements can be met. They may also demand certain endorsements to their title policies, such as zoning endorsements, which require some lead time and could delay closing.

Obtain Counsel

Seek competent legal counsel to guide you through these queries and to help you determine if other issues should evaluated.

In this buyer’s market, it may be the right time to buy a vacation home or investment property, but proceed with care and conduct the necessary research to be certain you are buying what you intend.