(Also works for buying land)

There are a number of pitfalls unique to vacant land sales (and purchase) that can ruin an otherwise smooth and profitable transaction.  Following is a list identifying many of the most common issues that can create headaches along with solutions that can be implemented in advance.

Buildable Parcel: One of the first questions to ask; Can a permit be pulled to build a structure on this property? This might seem to be a silly question however many properties have been split from larger tracts without proper permitting from local government authorities. Even though these lots have been owned for years (and taxes paid), one will not be allowed to build unless a correction is made. Contact your local Building department or growth management, give them the tax ID number and owner’s name to get verification that your land is buildable. If there is a problem, you can make application for a variance yourself or secure the services of a land planner.

*Zoning, Usage, Classification: Knowing how your property is zoned and what the future usage will be is critical to know when pricing your land. Perhaps your land is currently zoned low density residential or agricultural, but the future usage allows for high density residential or commercial, you could leave a lot of money on the table if you value it as current use.  Don’t confuse land classification with zoning. Review State, County or City Comprehensive Plan to determine what the future usage is planned for your property

Road Frontage: It is important to identify how access is gained to the land you are selling. Is there frontage on a publicly maintained road? If served by a private road, and is there a road maintenance agreement? Is access gained by an easement, and is it recorded? Is the land potentially “landlocked”? The answer to these questions effects the market value and determines the ability for a buyer to obtain financing. If there is a problem with access there are steps that can be taken in advance. If you have public road frontage or private road with a road maintenance agreement (at proper width for permitting) you are good.

Easements;  An easement is a “nonpossessory” property interest that allows the holder of the easement to have a right of way or use property that they do not own or possess. the property owner may continue to use the easement and may exclude everyone except the easement holder from the land. Easements can be determined by Boundary survey and/or title search

Five Common Types of Easements

  • Express easements: Intentionally created, deeded and recorded
  • Implied easements: Not written down
  • Prescriptive easements: Not written down but used continuous throughout the state’s limitation period.
  • Appurtenant easements: Recorded with land in perpetuity.
  • Easements in gross: Applies to specific entity. Utilitiestend to be easements in gross.

*Marketable Title; Clear title is crucial to a successful transfer. Many title problems are not discovered until the last minute and buyer and seller are ready to close. Since land usually does not sell as often as residential homes, title problems can go unresolved for many years and there is more likelihood of expensive “clouds” on the title cropping up. These can include (but not limited to) the following.

*Probate issues; If an estate was not probated properly in the past, there could be heirs who need to be contacted and asked to sign away rights to the property for clear title. *Mineral Rights; Mineral rights are reserved on land all over Florida, some are with “Right of Entry” or without right of entry. *Mortgages; Old Mortgages that were not properly recorded as paid in full. *Liens; Back real estate taxes, Mechanic’s Lien and Judgement Liens are not uncommon. Solution: Have a real estate Attorney or Title Company pull a preliminary title search to see if there is anything present that could disrupt a sale later.

Financing: Loan options are not as readily available to purchase land compared to existing residential homes. Down payment and interest rates are usually much higher. It is a good idea to have a working knowledge of the possible sources of funding.

Banks and Credit Unions: Usually require a track record with the borrower due to the loan being held “in house”. Shorter amortization term, 20% to 30% down payment at a rate 3% to 4% above normal residential Mortgages.

Farm Credit; Is a nationwide network of customer owned cooperatives providing loans and related financial services to U.S. farmers and ranchers, farmer-owned cooperatives and other agribusinesses, rural home buyers and rural infrastructure providers. farmcredit.com 

 Seller Financing: a purchase can be an option for owners who are in a financial position to received payment over time.

Solution: Best practice is to discuss the financing plans options with prospects and pre-qualify the buyer early in the process.

Flood Zones, Wetlands and Environmentally sensitive areas:  Throughout Florida Flood Zones and Wetlands are prevalent. A search of the FEMA flood zone maps can give an idea of what you are working with, https://www.fema.gov/flood-maps.  Local water management districts and environmental departments can help to determine if you have flood zones or wetlands on your tract of land and how it can be developed or mitigated. website can give you are protected Certain flood zones are usable with flood insurance. Certain species of wildlife are also protected in Florida. An example is the Florida Gopher tortoise. https://www.fws.gov/northflorida/gophertortoise/gopher_tortoise_fact_sheet.html

You don’t have to “go it alone”: Let us help you navigate the process with a free consultation, (no obligation). We can help you at any stage in the process you might be, or we can take it from start to finish.

**Disclaimer: This report is not intended to be a substitute for legal or tax advice. Realworks LLC strongly recommends you seek professional legal advice from an Attorney and consult a CPA for tax information regarding your specific situation.