Contingencies on the contract to purchase a vacant lot?

Question

I'm about to pull the trigger on some land for a new build single family.

I'm wondering if anyone recommends additional contingencies written into the contract other than your typical "title, survey, appraisal, insurance, inspection?"

I'm planning on paying cash for the land, and want to guard against potential HOA covenants/ deed restrictions that may prohibit construction. Would you recommend I write language into the land deal that allows me to terminate if I find a deed restriction/ HOA covenant that messes with future development?

I've checked the recorder's office and I can't find anything that looks concerning, however, a similar lot in the same subdivision was advertised on the MLS with a deed restriction prohibiting new builds under 2300 sf.

I'm also worried about other older encumbrances I haven't considered.

Do Title policies generally cover unrecorded easements?

Obviously policies wouldn't cover deed restrictions that are recorded, right? Since they're public knowledge?

Thanks in advance for your help!

Account Closed · Answer

The Vacant Land Purchase Agreement from the California Association of Realtors has a "lack of compliance with any governing documents or HoA requirements. But more importantly has an out for "conditions and influence of significance to certain cultures and/or religions , and personal needs, requirements and preferences of Buyer." Yours probably does too?

17 BUYERS INVESTIGATION OF PROPERTY AND MATTERS AFFECTING PROPERTY:

L. NEIGHBORHOOD, AREA AND PROPERTY CONDITIONS: Neighborhood or area conditions, including Agricultural Use Restrictions pursuant to the Williamson Act (Government Code §§51200-51295), Right To Farm Laws (Civil Code §3482.5 and §3482.6),schools, proximity and adequacy of law enforcement, crime statistics, the proximity of registered felons or offenders, fire protection, other government services, availability, adequacy and cost of any speed-wired, wireless internet connections or other telecommunications or other technology services and installations, proximity to commercial, industrial or agricultural activities, existing and proposed transportation, construction and development that may affect noise, view, or traffic, airport noise, noise or odor from any source, abandoned mining operations on the Property, wild and domestic animals, other nuisances, hazards, or circumstances, protected species, wetland properties, botanical diseases, historic or other governmentally protected sites or improvements, cemeteries, facilities and condition of common areas of common interest subdivisions, and possible lack of compliance with any governing documents or Homeowners' Association requirements, conditions and influences of significance to certain cultures and/or religions, and personal needs,requirements and preferences of Buyer.

Things I'd suggest including is investigation of services and feasibility of connection to public services specifically. Specific requirements of the fire marshall that will impede development, such as requirement of a hammerhead for fire engine turnaround.

Title insurance covers undiscovered easements and deed restrictions. As far as I know if Title can't dig it up and it's later found they're on the hook. Check your specific title policy.

I'm in the thick of this as well. Good luck to you!

Carey Greiner · Answer

Email me and I'll send you our state form, laying out some elements to consider. Sounds like an exciting project!