Robin Smith shares this guide to buying homestead land and the do’s and don’ts of purchasing property.
Imagine, as you eagerly scan the classified real estate listings, suddenly spotting an ad that reads like the answer to your dream: “Forty acres, year-round creek, part wooded, part cleared, some marketable timber, south-facing slopes, $26,000, low down, low monthly payments.” In such a case, it’d be quite natural to assume you’d found the buy of the decade.
So let’s say you decide to take a look at the place profiled in that advertisement . . . and it turns out to be even better than you’d dreamed. Huge trees tower overhead, like a great green cathedral. You follow the creek downstream to find that it opens into a gorgeous meadow. Your heart is taken, and you’re already starting to plan where you’ll put the house and barn. This is the place, your emotions are shouting, and–better yet–the price is right!
At this point, the owner or agent–seeing that you’re sold on the parcel (after all, you’ve been too clanged excited to play “uninterested buyer” games)–asks you for either earnest money or a down payment. Well, you know the property is what you want, and you also figure that someone else is sure to buy it if you don’t . . . so you prepare to shell out a big portion of your savings.
But wait . . . remember that any time you make a purchase–particularly as significant an acquisition as a piece of property–it’s vital to keep in mind the motto, “Let the buyer beware.” Before you put up cash that you may not be able to recover later, let’s use this guide to buying homestead land and examine the pitfalls possible in buying any piece of real estate, especially undeveloped land.
DO YOU HAVE PROPERTY ACCESS RIGHTS?
It’s impossible to overemphasize how terribly important access rights are. Be certain beyond the shadow of a doubt that permanent, legal, transferable access is specified in the deed. Never buy any piece of property without it.
I recently met a couple who’d bought a lovely place and built a house on it, acting on a neighbor’s assurances that he had no objections to their using his road to get to their property. Later, though, they had a minor disagreement with that fellow, and he promptly blocked the road. At that point, they started walking in and out across a bordering piece of government land . . . but were soon informed by the agency in charge that they’d better cease and desist or they’d be hauled into court on trespassing charges.
Becoming frightened, the people tried several other routes, each of which was eventually blocked when at least one landowner wouldn’t let them through. Because the unfortunate couple had no money left for an expensive legal battle, they were forced into abandoning the place, and they lost the cash they’d invested . . . which amounted to all of their savings!
As you can see, then, it’s imperative to make sure that no one can stop you from getting to your property. If it’s possible to obtain access by paying for it annually, as is the case when dealing with some government agencies, make certain that the right will be transferable if you later decide to sell . . . and that it’s not revocable. You’ll also want to find out who’s responsible for the maintenance of the road. Believe it or not, you could be both sued and fined as a result of nicks you might make with your snowplow or ruts created by your car or truck!
Furthermore, don’t assume that, because a piece of property is on a county or state road, access will be guaranteed. If the right wasn’t granted to the previous owner–or if no driveway has been put in yet–you may have to get permission from the county or state. Such permits are not always automatic, and they’ll generally cost some money.
Finally, be sure your right-of-way, when you do get it, is transferable to your heirs or to any other future owners.
WATER/SEWER/DRAINAGE AND RELATED MATTERS
Water and soil drainage are also critical concerns. That creek running across your dream parcel may be lovely, but take the time to discover whether you have the right to use it. Your water supply could, for instance, be part of a city watershed, in which case it’s possible that you’d be unable to use a single drop of the liquid legally. In addition, the law could require that all your livestock be kept several hundred feet from the creek . . . or could prevent you from legally putting in any sort of septic tank or outhouse. In short, it’s best to refrain from buying on a watershed, unless you have a written statement from the city specifying your rights and you’re certain you can comply with the most minuscule detail in the agreement.
Be aware, too, that outhouses are illegal in some areas, and–where this is true–a homeowner must either have a septic system put in (the location for which will be legally defined by proximity to domestic water supply and drainage) or, in some localities, hook up to a public sewer system.
If the installation of a septic system will be necessary, make several “perk” tests before buying any piece of land, to assure yourself that there are some places–away from your water supply–where the drainage is adequate. I once tested a piece of land only to find that eight hours after pouring some water in a test hole, the liquid’s level had gone down a mere fraction of an inch! On the other hand, though, I know of a sandy region with such “good” drainage that the dyed test water showed up in a neighbor’s water supply over 1,000 feet away! No sewage permits of any kind could be issued to anyone unfortunate enough to buy that land.
While we’re on the subject, let me make one final point: In some areas, the state holds rights to all water supplies, and–in such a case–landowners must file an application to use them.
WHAT ABOUT MINERAL RIGHTS?
Many people consider mineral rights to be of very minor importance. I don’t . . . because I’ve seen examples of what can happen to a farmstead when the owner doesn’t hold them. One man, for instance, bought what he thought was an ideal piece of property .. . built a beautiful home . . . and planted a hundred acres of orchards and gardens. In short, he invested a fortune in his land, in terms of both time and money. That individual knew he didn’t own the mineral rights to the property, but the real estate agent had assured him that they weren’t important.
Some 25 years later, however, after his orchards and gardens had matured and were actually supplying his entire income, he came home one day to find his house being bulldozed and one of his orchards already gone! Coal had been found on his land, it seems, and his deed stated plainly that the only compensation due him was the cost of the materials in his house and barns. In this situation, the farmer had absolutely no legal recourse.
Remember that just because no minerals of value have been found on your potential property, there’s no guarantee that one or more won’t be discovered there sometime in the future . . . or that a new use won’t be found for a “worthless” mineral that you do know is there.
WHO OWNS THE TIMBER RIGHTS?
In most cases, timber rights don’t pose much of a problem. A property owner will usually receive them conditionally. For example, you may be granted only enough timber to provide yourself with housing and fences until the land is paid for.
However, do be sure to find out whether there’s a timber contract out on the place. If there is, extreme caution is in order. You’ll want to learn when the contract expires . . . how many board feet the logging company is allowed to take, and of what species . . . and how that cutting will affect the looks of the land. Also, be sure to find out what condition the loggers are required to leave the property in after the harvest . . . then make certain that the company lives up to that agreement, or you could come home to an incredible mess.
In fact, after looking over the land’s timber contract, you may decide that you don’t want to buy the property after all . . . or at least that you want to reconsider the amount you’re offering.
HOW ABOUT LAND EASEMENTS?
It’s also important to research easements . . . the rights and privileges that persons may have in another’s land. First, find out what easements are available to you over other people’s property. For example, if you’re not on a county road, you’ll want to know whether the easements are wide enough to meet county specifications and permit public access, in case you and your neighbors later decide to have a road put in. (I know of one couple living on a fairly populated road that the county said it was willing to maintain if all I S families along the route would grant a 60-foot right-of-way. All but one–a man whose house is almost at the beginning of the road–are anxious to have that convenience, but that fellow has refused to give up the 30 feet required.)
In addition, you may want to make certain that easements are available to you for power and telephone lines. Even if such trappings of civilization aren’t important to you now, they might be later . . . and they almost certainly will be to your potential buyers, should you ever choose to sell your spread!
Naturally, you’ll also want to know what easements may apply to the land you’re buying. That way, you won’t plant your vegetable garden in the middle of someone else’s right-of-way.
As far as utilities are concerned, you should know that if you live at a considerable distance from a powerline, some companies have the right to refuse to put electricity in . . . even if you have the money and the desire for it.
I own a very remote piece of land which a friend–who was retiring–told me he’d like to lease part of . . . if running a powerline in wouldn’t cost too much. Well, I was quite surprised when the utility company representative rudely informed me that he would take my request before the board, but that it would be routinely turned down as being “too much trouble to maintain”. I then called a competing power company (folks in most areas aren’t fortunate enough to have this option) under the Rural Electrification Administration (REA), and was told that the people there would be happy to do the job for cash up front. The price, however, turned out to be much too high for my friend to pay all at once.
The moral of this story is, Know about power availability before you buy.
We’ve probably all had our fill of horror stories associated with land contaminated by chemicals. I won’t go into this further now, but I do suggest that you read Lewis Regenstein’s America the Poisoned (Acropolis Books, $16.95)–and other good books or articles on the subject–before laying down any cash.
After all, chemical poisoning can not only make your land useless but can also seriously affect your health and that of your children, your pets, and your livestock. So you’ll at least want to know what common sprays are regularly applied in the area (for roadside maintenance, perhaps). Try to find out, too, what has been used on the ground in the past . . . what has seeped into it . . . or what might come down the creek.
LAND PERMITS AND ZONING
In most areas, you’ll need permits to build a house, put in a septic system, and so on. Therefore, before you buy, find out how the property is zoned and whether you’ll be able to get the permits you want. This isn’t as routine, as it may sound, because there are areas with very strict codes that, for instance, allow only so many structures to be built in any given time period. And if you’re serious about farming, be sure the property is zoned for agricultural use. Some zoning and deed restrictions can prevent you from keeping certain types of animals or engaging in a commercial venture (including the sale of your surplus vegetables).
It should be understood that, before you purchase property, it pays to make sure the price is in keeping with the normal land costs in the area. After all, what may be inexpensive in California might be outrageous in Kentucky.
Furthermore, keep in mind that–when you do put down earnest money–you’ll be allowed to make the final purchase dependent upon written contingencies. Just what these qualifications are will be up to you, but do be sure that your earnest money agreement covers legal access, mineral rights, timber, and water, and that it requires the seller to deliver to you a deed conveying good title. And be certain to obtain a title search (which will tell you the legal history of the property), so that you know what encumbrances–if any–are on the land and can be sure that the seller does, in fact, own the property.
Make sure, too, that any money given to the seller goes into an escrow account and will be returned if the owner can’t convey good title. Don’t leave this up to chance . . . insist on such an agreement. I met a man who lost his paid–for property, and a good bit of money, because he didn’t take this simple step. And if there’s an underlying contract or mortgage on the property, get a statement in writing that it’s being paid–or that you’re making provision to assume it–because if this isn’t specified, the holder of the mortgage has prior claim.
Additionally, you should invest in title insurance, and read that policy carefully in order to understand exactly what it says. (It will, for one thing, list whatever encumbrances are on the land.) Also be sure to get the transaction recorded at the public registry (which may or may not be at the county courthouse . . . ask your local officials). You may, after the purchase, be able to further protect yourself by filing a Petition of Homestead. [EDITOR’S NOTE: See the article on this subject in MOTHER EARTH NEWS NO. 76, page 81. Information on ordering back issues can be found on page 48 in this issue.]
You will, of course, be faced with a lot of “legalese” when buying property. It’ll be necessary, for example, to become familiar with such terms as binders (often called offers to buy or deposit receipts), mortgagor, mortgagee, graduated payment mortgage, variable rate mortgage, mortgage clause, refund clause, maintenance clause, lien, settlement clause, loan origination fee, loan discount (or points), foreclosure, quitclaim, and acceleration clause. (An acceleration clause, for example, causes the entire debt to become due should one installment payment be late, and it’s definitely not something you’d want in your mortgage.)
Be sure, then, to consult a legal encyclopedia or dictionary whenever you come across a term that isn’t absolutely familiar to you, and to find out from a competent real estate lawyer exactly how that term is interpreted in your particular agreement.
Finally, study the area you plan to live in as thoroughly as possible. The time spent on this research can be critical to your future peace of mind. It’s amazing what a few miles can sometimes mean in terms of personal happiness and opportunity.
For instance, when I bought my homestead, I was assured–by the local real estate agent–that I would have no problem getting work. But shortly before I moved there, a disaster occurred that I’d had no warning of: The area’s only industry closed down . . . leaving people with no money to pay for outside services.
Nor was I informed that the people in that community tended to be somewhat hostile to newcomers. At first I thought there must be something wrong with me! Soon, though, I met several other people who had lived in the area less than a year or two, and all were beset by the same feelings I was experiencing. Within six months, every single one of them had left, all because they no longer wanted to buck that sense of being unwelcome. (I later moved to another community, less than 50 miles away, where I’ve been quite happy.)
I suggest, therefore, that you make the effort to talk to new residents in the area where you’re planning to buy and find out how they feel about living there. The answers you receive may be the final deciding factors as to whether you purchase or not.
These, then, are some of the points you’ll need to consider before investing your hard-earned savings in any land deal. Of course, you may decide to compromise on a few of the factors I’ve mentioned in order to make your homestead dream come true . . . but be sure you don’t compromise so much that your dream becomes a nightmare!
BUYING MOUNTAIN PROPERTY
A licensed real estate broker offers some additional tips for you to consider when buying mountain property.
By Carlton T. Bortell
The high country has a great appeal to many people, but buying property in such areas can be even more involved than purchasing slabs of flat land. Just understanding the topography of hilly territory can set your head awhirl! Level terrain can be cut up into neat geometric forms . . . but in the mountains, property lines may veer off at odd angles in every direction.
And as if that’s not confusing enough, you also have to deal with the vagaries of the individual surveys already on file. Some of these, for example, are very outdated . . . they reflect bygone methods of measurement . . . and often their reference points such as old stumps–aren’t to be found anymore.
If the most recent survey available to you is past its teens, have a new one made (the cost of doing so is a negotiable item in any contract). The updated document will enable you to discover, among other things, any inaccuracies in the amount of acreage cited. (I’ve seen 207 acres dwindle to 153 when resurveyed, and 34 acres expand to 47.) Sometimes the seller will establish a per-acre price, so that the total cost will depend upon the results of the new survey.
WHAT TO PAY FOR MOUNTAIN LAND
Location is, of course, an influence upon the price of any property . . . but in the mountains, the lay of the land is the key to real estate value. Tracts that are craggy, precipitous, and hard to get at may sell for $400 to $500 an acre . . . while more accessible parcels in the same vicinity could be priced ten times higher. “The steeper the cheaper” is a rule of thumb, yet such relatively inexpensive land might fit your plans perfectly. I’ve seen great chalets and A-frames built on slopes that many people would have vetoed as homesites. As a matter of fact, I recently sold two tracts of land for $15,000 each. One was 2 acres and the other 43 acres . . . and both buyers were pleased with their purchases.
Many mountain properties can be bought through owner financing, which is desirable because the interest rates charged will usually be much lower than those demanded by banks or savings and loan associations . . . and terms and down payments will often be negotiable, as well. It’s hard, however, to lay down absolutes about owner financing, since there’s considerable variation from one situation to the next. A lot depends upon all parties’ being fair-minded.
PLAN AHEAD BEFORE PURCHASING MOUNTAIN LAND
Before you even start to search for mountain land, it’s important that you visualize as clearly as you can exactly what you want. This bit of preparation will save you, and any real estate agent, a lot of time and effort. Be as detailed in this undertaking as possible. Try to forecast what you’ll want from the property five or ten years down the road, as well. If that includes a herd of cattle, for example, make sure your paradise has pasture potential. (Bear in mind, too, that any piece of mountain pastureland with a good water supply will be very expensive . . . and the costs are increasing rapidly in most areas.)
Aside from price, of course, there are other factors that will affect your buying decision, such as proximity to schools. The possibility of having to force your children to ride a bus for 20 miles over winding dirt roads is definitely worth pondering. Other factors you might consider include the locations of the nearest stores, churches, airports, and recreation facilities.
And what about past-purchase costs? Will you need to put in a drivable road, for instance? Many of the “jeep trails” mentioned in ads would challenge a Baja racer, and you can figure on spending about $4.00 per foot to have such an access graded, graveled, shouldered, and culverted to prevent washout. (That’s a ballpark figure, of course, but it ought to be fairly close.) Furthermore, a well may run $2,000 to $4,000 . . . while a septic tank can also be a costly item.
Right-of-way in the mountains may be an especially thorny proposition, too. Worse yet, merely verifying it is often time-consuming, since each property owner affected (some of whom possibly live out of state) must be contacted and enlightened as to why his or her signature is required. (In my role as a notary public, my latest deal turned into an ordeal when the would-be buyer and I had to hike to a remote cabin, and face a pack of snarling dogs, to get two of 18 necessary signatures.)
A broker’s services can be important in right-of-way matters. In fact, unless you’re very knowledgeable about real estate, finding a reputable broker–perhaps by asking friends for recommendations–is always a good idea. You could, of course, buy directly from an owner, but a broker’s know-how can be a potent ally, especially when you’re thinking of purchasing land in an unfamiliar region. Remember, too, that license laws put a broker’s livelihood on the lime when it comes to ethics and competence . . . and that isn’t the case with an individual seller.
You’ll also want a good attorney to check your contract, handle your title search, and make sure you have legal ingress and egress . . . especially if you must traverse other people’s properties. Being landlocked is no fun, as some have discovered the unhappy way.
Granted, there are countless other considerations to be taken into account when dealing with individual parcels and individual preferences. But in the long run, the necessary search (and research) will probably be more than worth the trouble to people who want natural splendor, clean air, and the chance to live a self-reliant life without feeling crowded.