Tips for Buying Unimproved Rural Land

Would you like to have your own rural area? Something to grow in your retirement years? Or maybe develop and subdivide in the future? Real estate is generally a good long-term investment, but before you shell out your down payment on a 40-acre “rancher,” there are a few things you may want to consider.

Entry and exit

Entry and exit is a fancy legal term for access. When looking at a property, there may be a dirt road leading to it. Don’t assume this is a permanent path that you can use as you please. Check with your county recorder and seller about the condition of the road. If in doubt, ensure that, as a prerequisite to closure, you are provided with a recorded road access agreement that clearly describes the location of the road. If the seller can’t come to an agreement about the road, walk away. Your land will not be worth much if it has no access to the sea.

Ask the dealer and locals in the area about road conditions during winter and rainy season. A dirt road may look perfect on a hot, dry summer day, but it can turn into a quagmire during the melting of spring snow. Find out if the road is plowed or maintained, or if there is a registered road maintenance agreement in which the owners who use the road share maintenance costs.

Location and cost of utilities

The closest power line may be five to ten miles away, so you will need to find out how much it will cost to get power to the ground. It can cost thousands and thousands of dollars to connect to the network, and the total cost can be prohibitive. Solar and wind power sources have improved in recent years and could be a great alternative. Before you buy, you may want to see if there are local alternative energy consultants and providers in town. They can tell you the approximate cost of installing wind or solar power, which will involve keeping your power source off-grid, and they can share stories about the experiences of others. You may also need to register for portable power generators. Sometimes you can convert gas generators to propane generators and then receive a discount from the local propane company because your propane generator is a primary source of energy. Check with your local propane company.

When you are looking at the land you are thinking of buying, take your cell phone and see if you can get a connection. If so, you have started phone service. You may need or prefer to have a landline rather than cell phone service. Like traditional electricity, find out how close the nearest main line is and how much it will cost to connect it.

When buying land in a rural area, there will most likely be no public water or sewage connections.

As for the water, if there is already a well, you are lucky if it is a reliable well. Make sure all necessary paperwork is in order at the well before purchasing and require as a condition of closing that ownership of the well be transferred to you. If there is no well, the department of real estate (or a similar agency, depending on your state) may have a report on file that will tell you about water availability and average water depths. You may be tempted to enter into a well-share agreement with a neighboring landlord. Shared property agreements, if drafted correctly, can be fine, but be sure to speak with an attorney before entering into any type of property agreement. Well-sharing agreements tend to turn into legal nightmares when ownership changes hands or when the pump is turned off and users start arguing over who will pay to repair it. There are increasing regulations on well sharing arrangements and it is much better to spend some money on a qualified water attorney before entering into such an arrangement.

Instead of a sewer connection, you will most likely need to install a septic system that complies with local ordinances. If possible, see if the seller will pay for the profit tests before closing. You don’t want to discover after you’ve closed that the earth is almost pure clay and you won’t be happy.

Other types of utility considerations are:

* Where is the local landfill?

* Is there a satellite service that can be used for telephone, Internet or television services?

* Are there local propane delivery services and, if so, will they provide a tank and ditch your lines?

Restrictive easements and covenants

When buying raw land in a rural area, particularly in the west, there may be cattle easements around your plot of land. These easements can be ten to twenty feet wide, which means you will need to remove any fencing around your property so that livestock can be driven along the easement. If you don’t fence your land, cattle may have a “right of way,” so to speak, to roam your property and graze. Depending on local laws and types of livestock easements, if your land is not fenced and your entire cornfield is eaten by livestock, the livestock owner will not be responsible for the lost harvest.

Be sure to take a look at the title report before purchasing. There may be restrictive covenants, such as the type of house or fence that you are allowed to build on your land. You may be prohibited from building certain types of outbuildings, or there may even be restrictions on whether you can place a mobile home on the property. If you plan to eventually subdivide your acreage, there may be restrictions on the size of your subdivided parcels (subdivision involves many legal and compliance issues). There may be highway easements, phone line easements, or other title issues that you need to know about. These matters are routinely disclosed in a document generally known as a title insurance pledge, which you will receive prior to closing if you are to receive title insurance.

Title and survey

Be sure to purchase title insurance when purchasing your land. This will protect you if there are easements, covenants, competing property interests, or other clouds in the title that were not disclosed prior to closing.

Check to see if the land was surveyed and laid out by a registered surveyor or engineer. If not, demand that it be inspected and provided with a written description and study of the property. If the land has been surveyed, walk around and locate the survey stakes. If the stakes were vandalized or missing, have them replaced by the registered surveyor.