Buying land can be tricky, though, even after you secure a mortgage for it. There are several important real estate concepts you’re going to want to familiarize yourself with.
Lessons in Land Buying
Unlike purchasing a house in an established neighborhood, where everything is pretty obvious and cut and dry, land can throw a lot of weird wrenches into the works. Let’s take a look at the most important aspects to keep in mind before and during your land acquisition.
Before you even set foot on a piece of property you’re interested in purchasing, ask about title restrictions. These are conditions that, when met, could go as far as to revoke your ownership or punish you in other serious ways. For example, if you’re interested in land for farm and you come across a lovely place that happens to border on public forest, you may be restricted from owning sheep because of the danger they pose to the unique neighboring trees.
Another more common example would be that the title restricts your subdividing the land. If you just want to get away from neighbors, that probably won’t be an issue for you, but if you had planned to build some houses on that land and splitting off the parts you don’t want to keep, you’re in trouble.
Always check the title restrictions because many will run with the land (that means they’re enforceable as long as the land exists). Don’t assume that because they’re 50 or 60 years old they’re unenforceable. They are.
Easements are a very specific type of property ownership where the legal use of your land is granted to another person or company. A good example of this is the utility easement that often runs along one edge of a home’s lot. That easement gives the utility company the right to go in and perform necessary upgrades and repairs without having to beg and plead with homeowners for permission.
Before you make an offer on any piece of land, it’s important to know what easements, if any, apply. There almost certainly is a utility easement somewhere, but there can also be private easements granted by any former owner that could remain with the property. It’s much better to know what it is that you’re buying and how much of that land is usable. If you don’t understand the maps that show these easements, ask your Realtor to explain them to you.
3. Landlocked Property
In the United States, there is no such thing as a landlocked property. That being said, there are properties that appear to be landlocked because there’s no way to access them from the road. In these situations, a right-of-way easement is created to allow unencumbered access to the landlocked property.
If you’re the one buying the “landlocked” property, these easements are generally not a point of concern. However, as a seller, right-of-way easements can hurt the value of your land and create an additional expense maintaining that strip of Earth you can’t use for other purposes.
Buying a house in a subdivision is easy because the land has already been surveyed and small metal pins placed at the corners of the lots. Even if your bank wanted some sort of survey done for a single family home purchase, all the surveyor has to do is find those pins and mark them. Ultimately, they’ll record your property as something like “Lot 12, Smith’s Addition, Your Town, State.”
When it comes to land, the story is very different. First, a surveyor has to do a bit of research beforehand to figure out where the parcel’s boundaries should be. Land is one of those things that can stay in families for decades, or even longer. Depending on where you live, that empty property could reasonably still be held by the original family to take title. It creates a significant challenge for surveyors.
Regardless, you need that survey to ensure that the land you’re buying is the land you think you’re buying. The surveyor can also verify the easements you’ve been told exist. Once that’s established and everyone is in agreement, you can go to Closing with confidence.
5. Adverse Possession
There’s nothing in the real estate sphere as confusing and infuriating as adverse possession. This is a situation where someone, often a neighbor, has managed to somehow use your land without your permission over a long period of time. Through a series of events, they then become the legal owner. And you won’t see one red cent ever.
This sometimes happens in urban and suburban neighborhoods when a homeowner installs a fence, for example. They may not even realize they’ve crossed the lot line. It’s nowhere near the same issue as it is when you’re buying land. Acreages can see significant shrinkage if a fence is even a few feet over the line. If the lot line is 300 feet long and the neighbor is intruding by two feet, that’s 600 square feet that you no longer control and may be at risk of losing.
Fortunately, if you catch the problem early, you can take actions to reclaim your land and rid yourself of your accidental squatter (because, let’s face it, most of the time it is an accident).
Step 1: Ask the neighbor nicely to move their fence. Show them your survey so they can see where the fence should be.
Step 2: Post “No:Trespassing” signs that are visible to the neighbor. This removes the “hostile claim” condition of a successful adverse possession claim. “Hostile” in this situation means that they’re using your land against your will.
Step 3: If the neighbor needs to continue to use the land for some reason, have them sign a land lease and demand a small rental fee. Again, this will remove the hostile claim condition, but in a much more concrete way.
Step 4: Lawyer up because it’s time to take this thing to court. Although the time that a squatter must occupy property to take it as their own varies, the sooner these issues are addressed, the better. The court can force your neighbor the squatter to move his fence to where it belongs.
No one wants to take their neighbors to court, so try everything else first. If you and the neighbor can come to an amicable agreement about the fence placement, you’ll be in a much better place to have a harmonious long term relationship with them.
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