Are you looking at buying some raw land?
It’s not like buying a house.
There is a lot more risk involved when you buy raw land.
So to offset those risks, you have a lot more due diligence items you need to complete.
Here’s a list of due diligence items I complete when purchasing raw land.
It all starts with your title.
So have your closing attorney run a title search early in your due diligence process.
The items you want to review are in schedule B of the title commitment.
The raw land may look fine when you visit it but it may have all sorts of unseen issues with its title.
There could be deed restrictions placed on the property that will only allow the land to be a park.
So you can forget building your home there in that case.
Or the county could have a tax lien on it.
This is a simple issue to fix. It just costs money.
But the most common issues come from easements.
I’ll get into easements in a different post but basically they are rights granted to an neighboring property owner to use the property for a specific use.
For example, you may allow your neighbor to park on your property. This is a parking easement.
Back to our raw land, it could have all sorts of underground easements running through the property like sewer lines, gas lines, power lines and many others.
Easements limit what you can do with your raw land. So make sure you know what easements are there.
You’ll need a survey of the property to make sure you are buying what you think you are buying.
So find a surveyor to complete the survey.
If you are getting a loan, you will need an ALTA survey. An ALTA survey is a more expensive survey where the surveyor double checks his work.
Make sure the surveyor puts the legal description on the survey and gives it you separately.
You’ll want that to make sure the description of the property in the deed matches the description of the property in the survey.
The survey will also show any title issues you have.
This will help you see any title issues.
The same surveyor that did the boundary survey can do the topographical survey.
A topographical survey will show you the contours of the property.
You’ll want a 2-foot field-run topographical survey.
It’s the most accurate.
And if you are building something, you want accurate.
Because designing building plans for a site with an incorrect topographical map can cost you hundreds of thousands.
But if it’s correct, you can just plan around the issue accordingly.
Without question, you will need a phase I environmental study.
With today’s ever growing list of environmental concerns, you need to make sure the previous owners or neighbors didn’t do anything stupid like dump chemicals on the property.
An environmental consultant will review state and federal records to see if any reports have been filed.
She will also look at previous uses of the property along with previous uses of neighboring property.
Based on those findings, the environmental consultant will make a recommendation on whether she thinks you need to do a phase II environmental study.
A phase II environmental study requires invasive testing like drilling to test the soil.
If the consultant recommends completing a phase II environmental study, walk away from the raw land.
You don’t want that risk.
The property could cost $6,000,000 but $7,000,000 to clean up.
It’s just not worth it.
Sewer or Septic
Believe it or not but where your poop goes matters a lot when it comes to what you can do with raw land.
Sewer gives you a lot more options.
You can build more buildings on a smaller area with sewer and you have fewer due diligence items to complete.
To find out if your raw land has sewer, contact the water and sewer department of your local municipality.
You may have to chase down a few numbers but they will be able to give you a map of local sewer.
If the sewer line stops before it gets to your property, you’re on septic.
If you are on septic, you need to find out if your soil “percs.”
This means the soil needs to be dense enough to slowly absorb the poop that leaches our of your septic tank.
To find out if the soil percs, you need a Level 3 Soil Survey completed.
A geotechnical engineer can do this. He’ll go out and test the soil to determine the areas on your property that can handle a septic tank.
If the raw land doesn’t have sewer and can’t handle a septic tank, don’t buy the raw land.
It may sound like a good idea, but you don’t want to build on rock.
It’s really expensive to blast rock.
So you’ll want the geotechnical engineer that completed the Level 3 Soil Survey to complete a geotechnical study.
They will come out and drill in several spots to determine the location and depth of rock.
This way you can plan your buildings around the rock and not have to blast the rock.
If the raw land is nothing but rock, just walk away from it.
Is this raw land in a flood zone? Did you check?
This one you can check on your own.
Just go to FEMA’s Website.
And look up your property on their maps.
You want to be in Flood Zone X because everyone is at least in flood zone X.
If you are a different flood zone, you may want to reconsider buying the raw land.
Finally, you need to know what the government will allow you to do with the property.
You can check this yourself.
You’ll need to go to your local municipality’s website and look up a zoning map.
Once you find the zoning category, you’ll want to head over to Municode.com.
From there, look up what you can do in that zoning category.
Just run a search within Municode. That will make it easier.
That is a lot I know.
But take it one step at a time and you will be fine.
Fair warning though, these items are not cheap. They add up real fast.
But they also save you a bunch of money and heart ache down the road.
So if you are interested in buying raw land, make sure you are serious about it.
Have you purchased raw land?
If so, let me know you use in the comments below.
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