Top 10 Tips for Buying Land
It is your duty to ensure that you are comfortable with the purchase you are about to make Conduct your due diligence before you commit to signing a Sale Agreement and making the 10% deposit to ignite the transaction. As this will be a major investment, you must feel comfortable at all steps of the sale process.
- Determine Your Budget. Will you make a cash purchase or do you prefer financing? If the latter, liaise with your preferred financial institution to confirm your pre-qualification limit, prospective terms and conditions of repayment. Make sure that you will feel comfortable with the loan and not over-extended.
- Start Your Search. What is your preferred method of finding your piece of the rock? Will you scour the internet, employ the services of a Real Estate Agent, attend auctions, drive around neighbourhoods looking for For Sale signs or review the classifieds for FSBO properties (For Sale By Owner). Whichever method you choose, don’t rush it.
- Locate a Good Piece of Land to Purchase. If residential, think about your commute to work and various social activities. Do you prefer seclusion, a subdivision, elevation, views, flat or sloping? And, what is your preferred lot size? Do you need additional outdoor space as a play area for your children or for family gatherings? What are the neighbours like?
- Pay Attention to the Physical Characteristics of the Land. You want to ensure that your land is not nearly worthless land. How deep is the soil in the area? Have the neighbours complained about having to dig deep for their foundation? Does the house have road access? Is it landlocked? Is it in a flood zone? Are there environmental issues in the area? Ask neighbours as many questions as you can as they will know the history of the location and any challenges?
- Research the Property Taxes. What are the annual property taxes? Even if you make a cash purchase you will be required to pay land taxes every year. Make sure the rate is not prohibitive.
- Verify Land Classification. Is the land appropriately zoned for your preferred usage? Is it identified as residential, agricultural, commercial, mixed-use, industrial, etc.? Each classification allows for different building types and regulations, etc. Is it in the flight path or particular water zone? If so, various building code restrictions will apply. If you are thinking of requesting a Change of Use, for converting your property for example from a residential home to a day care light commercial business, you should always check first with the Town & Country Planning Department to determine the probability of successfully doing so.
- Confirm if there are Covenants on the Land. In the creation of a land sub-division, some developers create a series of stipulations by which the residents in the neighbourhood must abide. This is usually to ensure a certain caliber of construction and encourage a certain style of life. For example, guard walls may not be allowed around the entire property, only fencing at the rear. No apartments or townhouses may be allowed in some neighbourhoods.
- Investigate the Presence of Utilities. Are utilities already in the area or will you have to apply to get installation brought to the area which could take time? Are there frequent water or electricity outages? Is there natural gas or will you require bottled gas? Are internet and phone lines of your favourite service providers in place or will they now have to be installed?
- Confirm Your Attorney. An Attorney-at-Law must represent your interest during a sale. Determine if you prefer to use your own Attorney or that of your Financial Institution. Are you comfortable paying your own Attorney’s fees along with the legal fees charged by your Financial Institution? Do you prefer to use an Attorney who has been hired by the Financial Institution to represent its interest first? Weigh the benefits of using one over the other.
- Ownership History Confirmation. Multiple parties can suddenly surface with legitimate claims to the land, either via inheritance, gift or easements. There may unrecorded liens or claims coming out of the woodwork. It is your Attorney’s duty to conduct their title search to ensure that title is clean and clear.