DEVELOPED VS. UNDEVELOPED LOTS
The land you are considering may be completely undeveloped with no representations from the seller about its characteristics or usability –typically called “vacant land.” Or you may be looking at a fully developed lot in a subdivision with sewer, water, power, and gas already brought to the building site, along with a commitment to buy a design/build package from the developer. Or anything in between – for example, a lot in a rural development with a partially built unpaved road, designated lots, and no other improvements.
There are pros and cons to each. In general, vacant land will be less expensive but requires much greater knowledge and diligence on the part of the buyer. A developed building lot in a subdivision requires less investigation by the buyer but is usually purchased at a premium. The more “developed” a lot is, the less development cost and risk the buyer assumes.
Not surprisingly, you will pay a premium for that – for both the infrastructure at the site (e.g., earthwork, well, and septic) as well as the peace of mind that the work has been done. However, a piece of “vacant” land can end up costing a lot more than a lot in a subdivision by the time you pay for the necessary permitting, infrastructure development, and utility hookups.
The lure of a large lot in the country…
It is compelling for many people planning a custom home. The attractions are many: open space, beautiful views, peace and quiet, privacy, garden space, and perhaps room for a shop, studio, or even a horse barn. Also, you can generally get more land than you would in a subdivision for the same or less money, although after you add up all the development costs, some or all of those savings will disappear. Figuring your real out-of-pocket cost for a piece of vacant land takes a lot of homework.
A piece of undeveloped land can hold many secrets and requires a thorough investigation by the buyer. Caveat emptor (Let the buyer beware!) is the rule here. If you are not experienced in this area, and don’t wish to take time to educate yourself, and are not prepared to spend a lot of time and possibly some money investigating potential building sites, then you are probably better off buying land in a subdivision.
The list of potential surprises that may come with a piece of land is long. Many will restrict what you can do with the land, most have cost implications, and others will affect your quality of life on the land. The most important issues are covered below, but there may be others unique to your particular town or region. So look carefully before you leap in this direction.
While many of the issues discussed in this section pertain primarily to undeveloped land, even buyers in a subdivision would be wise to familiarize themselves with a wide range of land issues. Depending on the specific project, buyers may still need to deal with clearing land, building a driveway, well and septic systems, lot drainage, erosion control, excavation, landscaping, etc.
Also building in a development is no guarantee that your project will be free of site-related problems. When their house is complete, a homeowner may still be surprised to discover that that much of their backyard is underwater the following spring, or that their foundation has settled significantly, causing cracks in the concrete and problems throughout the house.
I’ve seen both these problems in semi-rural developments: the flooded lawns were caused by a series of swales (wide shallow drainage ditches) placed behind and between two homes, intended to direct the runoff from a large hill toward stormwater drains. When spring came, the yards flooded, and after a fair amount of negotiation, the developer did come back and regrade the area solving most of the problem.
The other development was built on an extensive area of un-compacted fill brought in to raise the grade on one side of the road. Eventually, several homes and sections of the road were repaired by the developer, but at a much greater cost in terms of time, money, and personal distress (not to mention the involvement of lawyers).
Beware infrastructure provided (or promised) by the developer…
It may become your property, at least in part, once the development is completed. Private roads, community well and septic systems shared by the whole development, or shared systems used by two or more neighboring houses, are now yours to own and maintain, either individually or through a homeowners association. You didn’t build the $40,000 community septic system, guess who will pay to fix it if it fails?
Common land amenities that appear in the developers’ sales brochures may also never materialize: I’ve seen a promised playground take several years to appear – as a vacant lawn. And a promised hiking trail in another nearby development was never built due to marshland restrictions. Similarly, a promised swimming pond can turn out to be a mud hole or a poorly built private road may need extensive repairs after a couple of seasons.