Vacant Lot Purchase Agreement

[Matt C.]

I am looking to purchase a vacant lot in San Diego for the purpose of building a spec home. I have already spoken with the land owners and they are expecting my contract in the next day or 2. What is the appropriate length of time for inspection period and escrow in this kind of purchase? Better yet, does anyone have a contract they have used in California to purchase land for the purpose of new construction? There will be no splitting of lots, changing of zoning, etc. Thanks, Matt

[Nicholas Smith]

1) For your contingency period and close date there are a couple of factors to nail down before you write down a specific period for each.

a) Contingency Period (inspections): first, if you are applying a loan on the property, verify with your lender on the amount of time they need to perform their appraisals and underwriting. Write this into your "Loan Contingency" period part of the contracts. If no loan, great, forget about the above. For inspection periods, there is little to bee done on vacant land. Give yourself and the owners enough time to deliver you their required disclosures. On your part, you want time to verify that the land is zoned for the use you want. In building a spec home, give yourself enough time to coordinate with your architect to insure that your preliminary plans for a home will work for the lots. With a good architect who knows the area very well, this should take less then 14 days.

b) Closing: our clients primarily close within a few days of the release of contingencies for vacant land on an all cash purchase since there is nothing else to be done at that time (no one is moving out of the property, no one is moving in as it is vacant land). If there is going to be a loan applied to the Property for purchase, verify with your lender the time frame they need to fund once underwriting has approval.

2) There is no real purchase agreement in purchasing land with the intent to build. After you purchase the land it is up to you what you want to do with it. Once you go to sell the Property with a structure on it, there will be a New Construction Purchase Agreement used.

If you need some sample Purchase Agreements, shoot me a PM