Reprinted from MOTHER EARTH NEWS NO. 78.
Don't let your enthusiasm for an "ideal" piece of property lead to costly mistakes when buying land.
Suppose, as you eagerly scan the classified real estate listings, you suddenly spot an ad that reads: "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, 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 just too 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 . . . before you put up cash that you may not be able to recover later, let's examine the pitfalls possible in buying land—any piece of real estate, especially undeveloped land.
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 as well as to any other future owners.
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.
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.
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 power line, some companies have the right to refuse to put electricity in . . . even if you have the money and the desire to "plug yourself in."
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 power line 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.
Many people consider mineral rights to be of very minor importance. I don't . . . because I've seen examples of what can happen when a landowner 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 home 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.
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.
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 136.]
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.
I suggest 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!
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