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Buying vacant lot via private sale? Offer and vendor mortgage

Posted by picchudog (My Page) on
Fri, Aug 7, 09 at 21:11

I am hoping to receive some tips and advice re: buying vacant land. There is a vacant lot available for sale via private owner and we are interested in it. We have identified a builder to construct our house - we just need to finalize the land purchase before committing to the builder.

A few questions:

1) Given that it's a private sale (and we don't know the vendor - have only spoken to him once on the phone), what's the process re: negotiations? Do we do everything verbal first and then once everything has been agreed, put it down on paper?

2) I know when purchasing a house, one would put inclusions in the offer i.e. appliances, light fixtures etc. What type of inclusions would one include for land purchase? I was thinking of a recent legal survey...anything else?

3) The builder suggested that we put in the offer that the vendor is responsible for development charges to the city (approx 10% of the asking price) - thoughts on this?

4) The seller has expressed mild interest in doing a vendor mortgage to us. Our intent would be a short-term mortgage (give seller a small downpayment i.e. 5%) and then once the house was built, re-finance and then pay off the land vendor. Anyone have experience around this to share? What would be standard re: downpayment and interest rate?

5) Any other tips or things we should know?

We're located in the province of Ontario, if that makes any difference.

Much thanks!

Follow-Up Postings:

RE: Buying vacant lot via private sale? Offer and vendor mortgag

To start with, any offer you make should be contingent upon the property meeting your needs. You can see if the seller has an older survey, but normally the buyer would pay for an updated survey. You need to be sure that there are no zoning restrictions, easements or encumbrances, environmental issues (e.g., if it's in a floodplain, contains wetlands, or has previously been used as a dump)... that, absent sewer and water hookups, you can successfully install a well and septic system, that the ground will support the home you want to construct, etc.

I once saw an amazing custom home, built right across a fault line on a hill overlooking a river. The home was literally splitting in two, lengthwise. The neighbor had a larger house, but had an engineer ensure that the house was built an appropriate distance from the fault line. (If by chance you're in Sarnia, you can see it from your side of the St. Clair River, a few houses north of the River Crab in St. Clair.) Don't let yourself get surprised.

RE: Buying vacant lot via private sale? Offer and vendor mortgag

Not being familiar with Canadian rules/laws hard to offer suggestions, but here in the lower 48 I would suggest using a lawyer specializing in this type of tranactions.

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