Using a Real Estate Purchase Agreement
Things to Consider
A real estate purchase agreement is a contract that sets forth the terms and conditions agreed upon by the buyer and the seller of a piece of land. Among these terms that the parties must define are price, method of payment, and the condition of the property. Aside from these obvious issues that require consideration, there are several other things that someone who is purchasing land needs to think about.
A potential purchaser may want to first check for any liens against the property they are interested in. A lien is a legal claim on some type of property, making it collateral against a debt owed to another party. Purchasing property encumbered by a lien will keep the purchaser from having clear title, or full ownership of the property. In order to make sure there is no lien on a piece of property, the purchaser may conduct a title search, which should turn up any encumbrances that exist.
Adverse possession occurs when someone continually uses and occupies a piece of land without the permission of the actual owner for a period of time, usually ten to twenty years. The use must be visible to the owner, conducted without the owner’s permission, continuous, and the adverse possessor must hold the land to the exclusion of the true owner. Adverse possession usually occurs when the boundaries of adjacent properties are unclear. Therefore, any purchaser of a piece of land should check the property lines for adverse uses and notify the encroacher that they have extended beyond their defined property lines.
An easement gives its owner the right to use another’s land for a specific purpose without giving the holder the right of possession of the property. There are several different kinds of easements. Utility easements allow utilities such as sewers and storm drains to travel through the property of another. View easements prevent another from constructing any structure on their property that would obstruct the view of the easement holder. Easements may be acquired in a variety of ways and remain with the property even after its sale. Similar to searching for liens, any easement on a piece of property should be registered on its land title, and can be found through a title search.
Those purchasing land for commercial purposes must look into the local zoning regulations before completing the sale. There are several different methods that states use to define how land may be used. Conventional zoning, however, breaks areas down into sections defined as either single-family residential, multi-family residential, commercial, and industrial. Prior to purchasing property for a business, a prospective purchaser should contact the local Zoning Commission to make sure they are in compliance with local ordinances.
The issues laid out above are just a few of the pitfalls that someone purchasing land needs to first consider. Potential purchasers should conduct a diligent inspection of not only the physical premises, but the land’s history, and the applicable state and local laws as well.