Arkansas Property Due Diligence Checklist: What to Check Before Closing

Arkansas charges $3.30 per $1,000 transfer tax - and the Fayetteville Shale zone adds severed mineral rights that standard title searches routinely miss.

Arkansas property due diligence typically runs 30-60 days. A mid-market deal pulls 80-120 documents into the data room.

The state's 75 county circuit clerks each run their own recording system. There is no centralized statewide database, so title quality varies by county.

Severed mineral rights are the structural trap for out-of-state buyers. In the Fayetteville Shale region - Van Buren, Cleburne, White, Faulkner, and Conway counties - surface and subsurface rights are often split.

A standard title search won't surface this unless you request a mineral rights abstract. Most buyers don't know to ask until after closing.

Pipeline easements run across large swaths of north-central Arkansas. They affect development potential in ways basic county recorder searches miss.

They require a dedicated easement search alongside your title work. Budget for this separately from your standard title order.

Arkansas is a seller-pays-transfer-tax state at $3.30 per $1,000. On a $2M deal, that's $6,600 the seller owes.

Misunderstandings about who pays create friction at closing. Spell it out clearly in the PSA before you're at the table.

Where Arkansas deals go wrong

Mineral rights separation is the most common deal surprise. Sellers routinely convey surface rights only - and the deed doesn't flag what's missing.

In Fayetteville Shale counties, a regional operator may hold an active gas lease on the subsurface. You buy the surface and inherit drilling beneath your building.

Arkansas uses 75 individual county circuit clerks for deed recording. There is no statewide unified index.

Rural county records before the 1990s can be poorly digitized or physically indexed only. Out-of-state buyers using national title vendors without local abstractors miss gaps on older parcels.

Pipeline and utility easements recorded in separate instruments don't always appear in title commitments. The real estate due diligence process in Arkansas must include a dedicated easement search.

This is especially true for parcels with agricultural or industrial history. Central and north-central counties carry the highest pipeline easement density.

Arkansas property due diligence checklist

Set up an Ellty data room before diligence opens. Load every category below so you're organized when the buyer's request list arrives.

Title and ownership

• Order a full chain-of-title search through the relevant Arkansas county circuit clerk
• Pull the current deed, all prior deeds, and any recorded easements or restrictions
• Review the title commitment Schedule B exceptions before the inspection period closes
• Confirm no unreleased mortgages, mechanic's liens, or judgment liens are outstanding
• Verify the legal description matches the ALTA/NSPS survey exactly
• Hire a local Arkansas abstractor for rural parcels - national vendors miss pre-1990s gaps

Mineral rights and subsurface

• Confirm whether the parcel falls within the Fayetteville Shale production zone
• Order a dedicated mineral rights abstract - this is separate from the standard title search
• Identify whether surface and subsurface rights are held by the same owner
• Check for active gas leases, royalty interests, or mineral reservations in the deed chain
• Review any pipeline right-of-way easements recorded against the parcel
• Use Ellty to store mineral abstracts and subsurface legal opinions in a tracked data room

Environmental

• Commission a Phase I ESA per ASTM E1527-21 for all commercial acquisitions
• Review ADEQ records for the site and surrounding parcels with industrial history
• Run an underground storage tank search - high frequency on former gas station sites
• Check for wetlands and floodplain designations - Arkansas River corridor is high risk
• Budget for Phase II testing if RECs identified - add $5,000-$20,000 and 4-8 weeks

Zoning and permits

• Request written zoning confirmation from the relevant city or county planning office
• Confirm existing use is permitted under current zoning and matches certificate of occupancy
• Check for variances, special use permits, or non-conforming use status
• Pull all building permits, open permit searches, and certificates of occupancy
• For rural parcels outside city limits: confirm whether formal zoning applies at all

Leases and tenancy

• Collect all leases, amendments, side letters, and guarantees from the seller
• Verify no informal or oral occupancy arrangements exist on any part of the property
• Review rent roll and cross-reference against 3 months of bank receipts
• Audit CAM reconciliations on retail and flex-industrial leases for billing errors
• Confirm tenant estoppel certificates are obtainable before closing

Building and physical condition

• Order an ALTA/NSPS survey - flag metes-and-bounds errors on older rural parcels
• Commission a Property Condition Assessment covering all systems over 15 years old
• Review roof, HVAC, electrical, and plumbing for deferred maintenance
• Confirm ADA compliance on all customer-facing retail or office space
• Check storm drainage and flood mitigation infrastructure on river-adjacent assets

Transfer tax and recording fees

• Confirm transfer tax is allocated to the seller in the PSA - $3.30 per $1,000 of consideration
• Verify the DFA transfer tax affidavit of compliance is prepared before closing
• Calculate circuit clerk recording fees: $15 first page plus $5 per additional page
• Confirm no outstanding property tax arrears or special assessment liens
• Check for municipal code violations or open enforcement actions at the county level

Insurance and valuation

• Pull current insurance policies and 3-year loss run history from the seller
• Confirm flood zone designation through FEMA maps - especially for river corridor assets
• Order an independent appraisal scoped to the intended use and financing structure
• Verify coverage for tornado risk - Arkansas sits in an active storm corridor
• Confirm replacement cost coverage adequacy on older commercial structures

Utilities and access

• Verify all utility connections are active and in the seller's name or assigned
• Confirm road access is legally established and not dependent on informal easements
• Check for any utility easements that restrict development on portions of the parcel
• Review water and sewer capacity for the planned use intensity

Seller KYC

• Confirm seller identity matches the deed and title search records
• Obtain organizational documents if the seller is an LLC, LP, or corporation
• Verify no bankruptcy filings, judgment liens, or federal tax liens against the seller
• Confirm proper authority for the transaction if a trust or estate holds title

How due diligence works in Arkansas

Step 1 - Title search

Start with a full chain-of-title search through the county circuit clerk. Arkansas has 75 counties - each maintains its own recording system.

Digital records in Pulaski, Benton, and Washington counties are relatively complete. Rural counties carry more gaps on older parcels.

Your title attorney or local abstractor needs to flag unreleased instruments and easement discrepancies. Any mineral rights severances in the deed chain must be noted.

Order the title commitment and review Schedule B exceptions before your inspection period expires. Exceptions you don't negotiate become your liability at closing.

Step 2 - Survey and inspection

An ALTA/NSPS survey is standard for commercial acquisitions and should be ordered early. Metes-and-bounds descriptions on older rural parcels frequently surface legal description errors.

Pair the survey with a full Property Condition Assessment. Private equity buyers often underestimate deferred maintenance in cities like Jonesboro, Pine Bluff, and Texarkana.

Step 3 - Leases and income review

Arkansas has no standard commercial lease template. Informal tenancy arrangements on rural assets can create unrecorded occupancy rights that complicate closing.

Get every tenant arrangement in writing before you proceed. Review leases for renewal options, early termination clauses, and landlord maintenance obligations.

Cross-reference the rent roll against 3 months of bank statements. Confirm actual collections match what's in the seller's pro forma.

Step 4 - Environmental and mineral rights

Commission a Phase I ESA early - ADEQ records and UST searches are the most common source of delays. For industrial or land parcels in north-central Arkansas, add a mineral rights abstract.

Also add a pipeline easement search to the scope. Check ADEQ enforcement records for the site and neighboring parcels.

Waterfront assets along the Arkansas River may need Army Corps coordination. Flag environmental holds early so financing timelines reflect accurate risk.

Step 5 - Closing and recording

Arkansas deeds require a transfer tax affidavit of compliance with the DFA. The transfer tax rate is $3.30 per $1,000 - the seller pays in a standard transaction.

Recording at the county circuit clerk costs $15 for the first page. Each additional page is $5.

Attorney involvement at closing is standard. Expect $1,000-$2,000 for a straightforward commercial closing.

Allow 5-10 business days for instruments to be indexed after recording.

Arkansas due diligence: what's different

Arkansas is one of the few states where a routine title search can miss the biggest encumbrance. In the Fayetteville Shale zone, mineral rights are frequently severed from surface title.

Standard title searches don't include subsurface ownership unless specifically requested. Most buyers don't know to ask. Fundraising memos citing unencumbered ownership without a mineral abstract are presenting incomplete information.

The county circuit clerk system creates uneven record quality across 75 counties. Urbanized counties - Pulaski, Benton, and Washington - are well-indexed.

Smaller rural counties with older parcels require local abstractors. Remote title research that skips local expertise misses gaps that surface at closing.

Flood risk is a recurring issue for Arkansas River and White River corridor assets. FEMA flood zone designations affect insurance costs, lender requirements, and development potential.

A parcel in a 100-year flood zone may carry federally mandated flood insurance requirements. These can add significantly to annual operating costs.

Timeline and cost in Arkansas

A typical Arkansas commercial deal runs in three phases. Weeks 1-2 cover initial review: title search order, Phase I ESA kickoff, and ALTA survey order.

Also in weeks 1-2: mineral rights abstract request and lease collection. Estimated cost: $4,000-$10,000 for title, survey, mineral abstract, and initial legal review.

Weeks 2-5 cover deep review: Phase I ESA delivery, physical inspection and PCA, lease and CAM audit, and tenant estoppels. Also zoning confirmation and mineral rights analysis.

Estimated cost for weeks 2-5: $4,000-$10,000 for Phase I, PCA, and environmental counsel. Load documents into your Ellty data room and track which advisors are reviewing what.

Weeks 5-8 handle resolution: Phase II ESA if RECs found, title exception negotiations, and repair credits from PCA findings. Add $5,000-$20,000 and 4-8 weeks if a Phase II is needed.

Total soft cost for a mid-market Arkansas deal: $15,000-$40,000 depending on environmental complexity. Factor the seller's transfer tax into your closing model - and confirm the PSA allocates it correctly.