Property With A Fault Line

[Christopher Duron]

I feel that this is a series of stupid questions, but I’d like to get multiple opinions.

I am in the process of buying a piece of land located in Southern California. It is in an area where land is high valued and scarce. The problem is that it is on a steep grade and comes with a fault line. The geo report classifies it as “potentially active” and minor. The recommended set back for building is 15’. It does decrease the usability of the land but it may still be developable property. I would not finalize/close the purchase contract until all permits have been approved by the city.

I’m interested in any and all thoughts that come to mind. Some areas of interest are: is the property going to be harder to sell, what kinds of issues should I anticipate, has anyone ever dealt with this before, etc etc. Anything that comes to mind would help me tremendously.

Thanks. I look forward to hearing from the community.

[Bob Ritner]

I second the suggestion of retaining a geotech engineer. In California I have always done this as part of my pre-purchase due diligence. In your case, the city will require a fault trench study to determine the precise location of the fault line. If there are fingers, it may render the property undevelopable after factoring in the 15' setback. In addition, being on a hillside in SoCal, it is critical to determine the makeup of the hillside sub-surface conditions as this will make the difference between a 150k foundation and a 500k foundation. The fault trench study is not cheap, but neither is the land and better to find out now.

[Henry Clark]

How many acres?

What REI strategy do you plan?

What is the zoning?

[Christopher Duron]

Bob, thanks very much.  The gel study has been performed and their recommendation is 15’ from the fault line.  It is already mapped on a surveyed map/site plan. It appears to cut into the usable space quite a bit, however there should be enough for building a structure.  If I am reading this correctly, your recommendation is to get the soils report and speak with a structural engineer to estimate a grading, retaining, and foundation cost. Is that correct?

thanks again.  Great points on everything.  

[Christopher Duron]

Hi Henry,
Less than an acre. 

Buy and hold - utilize sweat equity tobuild a primary residence for my wife and I and build an ADU to offset the cost of ownership. I guess a modified house hack with development hurdles.

RS 1-7

any thoughts?

[Bob Ritner]

If you already have the fault line mapped with a fault trench study, then that is one big variable out of the way. The second thing I would do is have a soils report done, where they do some borings to determine the composition and orientation of the underlying soil/bedrock. Based on this, they will opine on the developability of the site and give preliminary foundation recommendations. You do not need them to develop the full report, just preliminary recommendations based on the borings laboratory findings. This prelim report can then be given to a residential contractor that can give some very rough numbers on grading, retaining and foundations. This is where all of the big budget busters usually occur. 

[Christopher Duron]

Bob, copy that- boring, soils report, developability, preliminary foundation recs, and contractor estimates.  I’ll work on that this week.   Thank you very much.  

[Kristi Kandel]

Quote from @Christopher Duron:

I feel that this is a series of stupid questions, but I’d like to get multiple opinions.

I am in the process of buying a piece of land located in Southern California. It is in an area where land is high valued and scarce. The problem is that it is on a steep grade and comes with a fault line. The geo report classifies it as “potentially active” and minor. The recommended set back for building is 15’. It does decrease the usability of the land but it may still be developable property. I would not finalize/close the purchase contract until all permits have been approved by the city.

I’m interested in any and all thoughts that come to mind. Some areas of interest are: is the property going to be harder to sell, what kinds of issues should I anticipate, has anyone ever dealt with this before, etc etc. Anything that comes to mind would help me tremendously.

Thanks. I look forward to hearing from the community.

 Always think about the challenges the next developer will face. 

1. fault line reduces the buildable area of the lot = reduce property value

2. talk to a structural engineer & contractor about the added design and costs associated with both the fault line and the retaining wall. 

3. if the steep grade is too steep then you might need to pile drive a wall vs grading and building a retaining wall which adds a lot of cost. 

Think of the property value from the perspective of relatively flat land without atypical construction costs. Clean soils, no grade challenges, no power lines or utilities running through the property, no street improvements (curbs, gutters, sidewalks, new lanes, streetlights),etc. ANYTHING on a prospective property that has any of those items then reduces the property value. Sometimes it's 1 for 1 and sometimes it's a percentage of the cost if the market / land is super desirable. 

If the purchase price is reduced for the atypical development conditions and the deal pencils then it's a project that you or anyone else could move forward developing. 

[Christopher Duron]

Thanks Kristi.  Great break down of your thoughts.
1. I completely agree and have conveyed this to the seller and he didn’t tell me to kick rocks so there maybe some negotiation capability.

2. I’m working on that exactly

3.  I didn’t think about that. I’ll get a couple structural engineers to take a look. 

I like the perspective of looking at it like flat land. I talked to an appraiser who would put flat land around $100 a Sq foot. To get this graded and retained I anticipate $30-$40 per sq foot. I guess that’s close to where the deal pencils for the land minus the unusable portion due to the fault line.  

I’ve actually been working through this quite a bit. Your questions and input are helping me solidify my stance as I type. So thank you. 

I’ll report back with any other findings or details. 

[Kristi Kandel]

Quote from @Christopher Duron:

Thanks Kristi.  Great break down of your thoughts.
1. I completely agree and have conveyed this to the seller and he didn’t tell me to kick rocks so there maybe some negotiation capability.

2. I’m working on that exactly

3.  I didn’t think about that. I’ll get a couple structural engineers to take a look. 

I like the perspective of looking at it like flat land. I talked to an appraiser who would put flat land around $100 a Sq foot. To get this graded and retained I anticipate $30-$40 per sq foot. I guess that’s close to where the deal pencils for the land minus the unusable portion due to the fault line.  

I’ve actually been working through this quite a bit. Your questions and input are helping me solidify my stance as I type. So thank you. 

I’ll report back with any other findings or details. 

 @Christopher Duron Keep me posted! A ton of my development work is in CA and 100% you can negotiated down the purchase price based on your findings. I've done it hundreds of times. It's all in how you outline the hurdles to the owner, have a couple prices on costs (that way you're no longer talking subjectively), and make it clear that ANY buyer will have to do this as well while treating the owner with respect and building a relationship. 

[Christopher Duron]

Thanks Kristi. I will do that exactly annd I’ll let you know how it goes.  And, yes, absolutely I will stay respectful. Thanks again. 

[Brian Koons]

Is this the land on Jefferson? 

I did extensive due diligence on it and would love to discuss! (even if that is not the property, I can probably help out!)