How to Buy Land to Build a Dream House?
Purchasing empty property on which to build a house is a significant step, and it is frequently taken by people seeking freedom and independence from a conventional development community.
You get to design precisely what you want—and where you want—in a home that fits your budget.
As a result, it is easy to fall in love with a piece of land before conducting due diligence.
You begin to fantasize about creating a home with a spectacular view and feel compelled to act swiftly to realize that goal.
I know because I nearly did! I've been through it and done a lot of research—complicated!
Ideally, begin learning before even looking at land. We will concentrate on purchasing "empty land," rather than acreage within a development.
Those properties have had a lot of the effort done for you and are considerably easier to acquire.
Let's take a look at the most crucial aspects to consider while purchasing land. Before committing to a land acquisition, I strongly advised enlisting the services of a real estate lawyer to review all documentation.
1. Clear Ownership
Perform a title search. It will be necessary if you are taking out a loan to buy the land.
A title search looks for past heirs' rights on the land, as well as any debts or covenants (previous agreements that are legally binding).
You can get title insurance to protect yourself if an issue is discovered later.
This is a bit complicated, but if any difficulties are discovered, you may still opt to proceed with the title-insurance coverage as a safety net.
Having it might save you hundreds of dollars in the long run.
2. Restrictions imposed by zoning or deed
Can you construct the construction you choose on the property?
For example, for a variety of reasons, you may be unable to construct a four-bedroom home but only a two-bedroom house.
And evaluating a neighbor's property by what's on it is no assurance.
They may have been grandfathered in since they were built prior to changes in zoning rules.
Check with your local planning authority or your real estate agent for some of these answers:
Future Plans for the Area Is there any kind of industrial plant or other potential eyesore in the works?
And you might be able to acquire aerial pictures of the lot if you detect a problem nearby that you didn't spot on your drive in to look at the property.
Does the property comply with fire department access requirements?
If there are any problems with the roads or if renovations are required, this can be pricey.
Is it possible for a Homeowners Association to have jurisdiction over the lot?
They may have regulations that must be followed as well as annual payments.
Is any of the land "protected," such as wildlife habitats?
This may prohibit you from building in some areas of the property.
This issue, in conjunction with the percolation-test findings , may compel you to construct on a small portion of the lot.
3. Services
The major concerns are water and sewage disposal.
If the lot utilizes town water and the town's sewage system, that's fantastic, but you'll have to pay to use it.
However, in rural regions, this will not be the case.
You will have to begin from scratch:
Is there any water on the property?
It makes no difference how beautiful the terrain is if you can't have access to water for your requirements.
Will a well be required? The cost of drilling wells is directly proportional to their depth.
Unfortunately, depth is unpredictability before the job begins.
A neighbor's well may reach the water at 50 feet, but yours may need to be considerably deeper.
If a functional well is already in existence, it may save money, but it may still require inspection.
The all-important "perc test" was crucial when I was looking for property.
A percolation test is an official assessment of soil and drainage quality that determines where and whether a septic tank and leach field (septic system) may be installed.
The perc test determines where the septic system may be installed on the land. It may restrict where you may build your home on the land.
It's critical and may force you to change your building plans since the well water and septic system must be separated by a particular distance for safety.
If a typical septic tank and leach field cannot be installed on the land, various newer but more expensive systems may be feasible.
Your engineering firm will be able to help you.
The previous landowner may have done a perc test on some sites.
A passing perc test is advantageous since it saves you money.
However, keep in mind that a "passing exam" may include time constraints.
It might have to be redone.
If you require a perc test, keep in mind that there are time constraints based on the climate in your area.
Winter, for example, is impassable in New England due to frozen ground.
The county generally sets a time frame in which testing can be done.
Electricity and phone: If your location is remote, some businesses may have the legal right to refuse to run power, cable, and phone lines.
Alternatively, an advance financial contribution may be requested.
4. Property Boundary
A survey is required to ensure that your 20 acres are not actually 16.5 acres.
Or that a neighbor hasn't constructed a structure that encroaches on your land.
Hire a local engineer to survey the property and give you with a survey map (or "plat map") detailing the land's borders, structures, septic-system position, and so on.
5. Access and Easements
The crucial problem of easements follows. An easement, according to Findlaw.com, is a "right-of-way provided to a person or corporation permitting access to or across the owner's land."
The entry point to your property may not always be on your property; it may be on the land of a neighbor.
You should include a language in the deed that addresses this issue to guarantee that you have permanent, transferable, legal access.
I've heard of people losing access to their own property when a verbal arrangement to utilize a road on adjoining land falls through.
A typical easement is one in which a utility provider retains certain authority in order to preserve access to its equipment on your land.
6. Issues That Are Frequently Overlooked
Remember that purchasing raw land is more complicated than purchasing ready-to-build property or a lot within a development, and we'll now discuss several significant but sometimes ignored problems in such a transaction.
Buying inside a development is easier because the developer has most likely solved most or all of these concerns.
In any event, have an attorney check all papers before closing on a home.
Latin for "whoever owns the land, it is theirs all the way to Heaven and Hell."
What this means is that a landowner is considered to have ownership over all parts of his or her land, from aboveground to as deep belowground as one may go.
For centuries, this was common law practice in England, and it impacted American legal thought—though with significant changes over time.
Consider your land to have three levels: sub-surface, surface, and above the surface, each with its own ownership!
Mineral Rights
Each state has its own set of regulations, and it is critical to understand your rights while acquiring land.
Mineral rights are essential because they affect the long-term viability of your land ownership.
You may just be purchasing surface rights, and the mineral rights may not be yours.
At some time in the past, the former owner may have sold them to a mining firm.
The ramifications are enormous—for example, the firm may decide to commence drilling as part of the exploration of your property years in the future.
It will also be lawful.
Even if your mineral rights are intact, the impact of a neighbor's sale of mineral rights might damage your land—in certain cases, underground drilling crosses property borders.
Modern technology allows drilling to go from vertical to horizontal in order to explore adjacent minerals.
This is especially true in places where fracking is prevalent, such as Pennsylvania, New York, and West Virginia. Some states have laws requiring profit sharing; others may not.
Another concern is that, regardless of what the contract says, the aftereffects of mineral extraction (which may include more than just oil or gas) may not be apparent for decades, at which point your successors may be forced to cope with cleaning.
This might be the situation if the corporation is no longer in operation, for example.
Timber Rights
It is possible to purchase land but not the ability to possess the trees on it.
Check to see whether there is a standing timber contract on the property.
Such contracts can be for a certain length of time or in perpetuity (basically, forever), or they might be restricted to the type or amount of tree harvested.
That towering oak you want to shade your porch or the lovely forest of evergreens that gives much-desired solitude might be removed.
Needless to say, this is not something you want to be involved with.
If you fall in love with a property and don't want to walk away, you may be able to buy back the timber rights in some circumstances.
Air Rights
7. Financing Land
It is critical to consider how you will purchase the land for your dream house.
Financing a land acquisition may be more challenging than financing a home since lending institutions prefer collateral that can be readily liquidated to satisfy the loan's debt.
The bank typically finds it more difficult to sell land than it does to sell a house.
One innovative technique is "seller finance," which involves working directly with the land seller.
This may make sense for you, the buyer, because some of the typical costs are not included in this seller financing.
The financial proofs and barriers that must be overcome may also be reduced.
Not yet ready to build:
Undeveloped land loans often have shorter periods and higher interest rates since the lender considers this sort of loan to be significantly more risky.
The less ready the land is to be developed, the less appealing it appears to a bank.
Ready to build:
This procedure may be a little more complicated for rural property because you will be bringing together additional materials (plans, approvals, contractor, and possibly sub-contractors and their schedules, etc.).
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