Buying Land to Build? You MUST Do These 8 Key Things Before You Close:

by Dean Dalvit on March 9, 2015

EVstudio has been involved in a great number of projects and a wide variety of situations involving our clients that for one reason or another didn’t quite fully complete their due diligence when purchasing their property. It’s an easy trap to fall in to – you fall in love with the site and make all sorts of assumptions that everything is perfect. Follow these 8 steps to make sure you don’t get stuck on the wrong end of the deal:

1) Get a full survey that includes setting any missing boundary markers, all improvements (yes, on vacant land, improvements include utility pedestals and the road or street accessing the lot), all easements and everything itemized on the Title Exceptions. While you’re at it, have the surveyor shoot in the topography and map any site features as well – this will save you time and frustration later when you need it for design. Try to negotiate for the Seller to provide this because if the deal falls through, they have the value of it and it will do you no good.

2) Insist on a Geotechnical Soils Report. Regardless of who pays for it, this is a huge due diligence item that can prepare you for what to expect with your foundation design. Without one, it is equivalent to buying a home without an inspection. You don’t want to find out later that your site is on an old landfill just a few feet down. This is also a piece of information that doesn’t serve you if you walk away, so try to negotiate this to be a by Seller item if you can.

3) Make sure that you have the Seller provide you with proof of water and sewer availability.   If the lot is well and septic, you will need assurance that a well is allowed and the site can support a septic system.  A lot is not nearly as valuable if it is a mile from the nearest utility. This goes for other utilities like electricity and gas as well, but without water, you don’t have a buildable lot.

4) Have the Seller verify that all neighborhood improvements have been made and approved by the Authority Having Jurisdiction. This is especially critical on new developments where the developer may not have completed roadways, drainage structures, utilities or fire protection systems. If these things are incomplete, you should discuss an escrow amount or insist that the developer post a bond to ensure that these improvements get made. Consider what happens to you and the rest of the owners if the developer walks away.

5) Make sure that the neighborhood plat and all easements have actually been filed with the Authority Having Jurisdiction (typically the city or county clerk and recorder). You must have proof of access and if these legal instruments are not actually recorded, then they don’t exist and you will have to deal with that when it comes time to permit. Seeing a road doesn’t NOT mean that you are entitled to use it and you do not want to get involved in a lengthy and costly legal battle to fix it.

6) Verify that the zoning is appropriate for what you want to do. This seems like an obvious one, but you would be amazed at the level of granularity local zoning codes can get. You planned to have a barn or a guest house but you’re not in the right zoning to allow it? Oops. A simple call to the City or County tells all.

7) Fully review all of the HOA documents before you close. Many people gloss over these, but there is very important information in here that can control what you want to build and how the HOA operates. HOA’s often have more restrictive covenants than the City or County Zoning and once you sign, you have to live by those rules.

8) Check with your homeowner’s insurance agent that your property can be insured. This can be a challenge for remote or heavily forested sites, and also for lots in or near a floodplain. It’s a bitter pill to swallow if you can’t get insurance, and that could render you without financing.

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