6 Critical Questions to Ask When Buying Land

Things to Find Out Before Purchasing Land

Performing due diligence is vital when purchasing a home. It is even more crucial when buying a building lot. Buying land can be an exciting and profitable investment. However, it is important to ask questions and get advice before making a purchase.

Real Estate agents are asked important questions all the time as it pertains to land. Things like how big is an acre or how many square feet are in an acre. While these are basic questions with straightforward answers, the are others that may not be so simple.

We will look at six questions that should be asked when buying land. These are the questions that you should either ask a Realtor or a land owner before making a purchase.

Is The Land Buildable?

The most vital question to get an immediate answer for when buying land is whether it's buildable. When your intention is to build a home the rest of the questions will become meaningless when the lot you want to purchase can't be built on.

There are quite a few things that will determine whether you will be able to pull a building permit for house construction. We will cover these things so you're well prepared to move forward or not.

It will not only be essential to find out if the property is buildable but also if you will be able to build the type of home you're interested in.

Are There Any Restrictions, Easements, or Encumbrances?

Once you have determined that the land is buildable, you'll want to know if there is anything that hinders your use and enjoyment of the property. Three things that could hinder your use include easements, encumbrances, or restrictions.

Land Restrictions

The restrictions on the property will determine things like the height of a building, whether a property can have a pool, and the types of homes that can be built on the property. If the lot is located in a homeowner's association there can be covenants that owners have to follow.

Land Easements

An easement is an agreement between two or more people that allows one person to access another person’s property for a limited and specific purpose.

An easement can be a legal agreement that allows one person to use the property of another without having to pay for the use. There are different types of easements, including those that allow people to access private land, and those that allow people to cross public land.

When there is an easement on your property held by an individual or entity, that party has the right to access your property within the parameters set by the easement.

For example, utilities typically hold easements in order to access power lines or cables on your property.

If you hold an easement, you have the right to access property that is not legally yours, so long as you comply with any terms and conditions of the easement.

Crossing someone else’s property to access your home would be a common example.

Land Encroachments

An encroachment would be different but equally vital to find out if there are any. Discovered a property encroachment could hold up the sale. A lender will not grant a mortgage when there is a significant encroachment from one neighbors property to another.

When a potential encroachment is discovered, it will often be solved by hiring a professional land engineer to provide an accurate property survey.

Land Encumbrances

A key question to get the answer to when buying land is whether there are any kinds of encumbrances.  An encumbrance is a claim made by an entity that is not the owner against an asset.

Real property can be burdened by various legal restrictions, such as liens, easements, leases, mortgages, or restrictive covenants. These encumbrances can affect the transfer-ability and/or use of the subject properties.

What Utilities Serve The Land?

When buying land in either a subdivision or a country road, you will need to find out what utilities are available. Does the property have natural gas or will you have to have oil or propane? Even more important does the land have access to public sewer or will you need to install septic system?

A septic system can be very expensive to install. You will need to ensure that there is an approved septic design in place by the city of town. Without an approved plan you may not have a buildable lot. Never move forward with the purchase of a lot without getting a satisfactory answer to this question.

Another essential question is whether the land has town water or you will need to install a well. If a well is going to be installed it will need to meet minimum quality and quantity standards.

Without having the ability to provide ALL of the appropriate utilities to a building lot, it is unlikely you'll be able to get a land loan.

What is Abutting The Property?

While the land you are purchasing is important, so is the surroundings. When you want to sell the property sometime in the future is there something nearby that could cause a buyer to have second thoughts?

Whatever is abutting the property could have an impact on the future value. Do some due diligence to ensure something can't be developed that could be detrimental.

Is The Title Clear?

When buying any property it is crucial to have a title search performed to make sure there is a clean title. It is also a good idea to purchase title insurance to protect your investment from potential future claims.

How Much Are The Property Taxes?

Taxes on vacant land are assessed annually and can vary depending on the property's location. It is important to get an estimate of the taxes so that you can be sure they are within your budget.

Once your home is built there will be a new assessment for the total property value.

Final Thoughts

Buying land to build your own home can be an exciting proposition. Just make sure you do your homework and ask all the right questions. These six questions should have satisfactory answers before moving forward.