I have a 1 year LC that I am looking over about some property I want to buy, but in it are 2 items that I am quite not sure of the full meaning.

#1. It states as follows; "Vacant land sold "as is", this is for a commercial building and the zoning has to be appproved or a variance granted or this offer is void." - - - Since this is vacant land that is currently zoned resendential and is to be rezoned commercial I would take the above statement to mean that if it is not approved for commercial that I don't have to buy the land?

#2. "This offer is subject to a perc test at purchasers(ME) expense and is not to exceed $10,000 cost for a tile field and tank." - - - Does that mean if it doesn't perc or the cost of field and tank exceed $10,000 that I don't have to buy or whatever money I have gave is to be refunded?

-- TomK(mich) (tjk@cac.net), February 11, 2002

Answers

No to #1....sold as is, means regardless of how the zoning turns out. Yes to #2, with the exception that your money may or may not be refunded, I'd get it in writing if I were you.

-- CJ (sheep@katahdins.net), February 11, 2002.

#1 - you are correct that if the zoning is not approved, the contract is voided. #2 - The perc test is your choice. You have the option of having a perc test done; however, you have to pay for it. If it doesn't perc and/or the tile field and tank exceed the cost of $10,000 to install - - you don't have buy the property. Please be aware that there may be other inclusions or exemptions in the contract and it is really best to consult an attorney.

Land contract is ALWAYS a risk. If the seller has a mortgage (some will tell you a "loan" but any loan on real property IS a mortgage) on the property and he fails to make the payments -- you lose the land even though you have been making all your payments. Additionally, the owner of the property could take a loan out at any time and it could exceed what you owe on the property and would be unable to obtain clear title at the time you acutally pay off the property. Most states do not permit you to record your interest in the property since it is a contract between you and the real owner of the property and not considered a mortgage.

-- Karen (db0421@yahoo.com), February 11, 2002.

Consult a real estate attorney in that area. I suspect you will be told buying land on a land contract is about the worst possible option. Somewhere on the forum someone spoke knowledgeably on the benefits of a deed of trust as I recall. It would basically be a one- year mortgage and, as such, would be a recordable lien on the property. In your offer, you can stipulate it is contingent upon obtaining certain zoning (talk to the local zoning board), it passes a perk test (frankly dumb if you don't get one), you can get, say three, estimates of a guaranteed to pass inspection septic system for $10,000 or less and the property will have a clear title (here also, frankly dumb if you don't get title insurance). Any ernest monies should be held by a third party, whether it be an attorney or real estate agency. I have bought two adjoining parcels through a local attorney, bypassing the real estate agency I normally use.

I sold three acres on a land contract (called something else locally) and had to repossess it. Ended up buying it back at a courthouse steps sale, then reselling it with the buyer getting bank financing.

Don't forget the aspects of power availability and a good source of water. Utility companies get to be very costly when they have to run additional lines to remote properties. Also, a well might be written such that the seller guarantees good water at a specificed flow rate no deeper than a specified depth. Any deeper and the seller pays the extra cost.

A third party, such as mentioned, can hold part of the settlement to allow for the contingencies specified.

Before closing thoroughly read the land description to ensure surprises don't happen, such as a logging company having an easement through your driveway and backyard to a timber stand. It has happened.

When was the last time the property was surveyed?

I highly recommend the book, "Finding and Buying Your Place in the Country" by Les Scher. It should be required reading for anyone considering rural property.

-- Ken S. in WC TN (scharabo@aol.com), February 11, 2002.

Ken: We are in Michigan and as of to date Michigan is still consider a "Mortgage" state and "deed of trust" are not used. I also have the Title information and survey which was all done 1/31/2001 by Chicago Title of Michigan.

-- TomK(mich) (tjk@cac.net), February 11, 2002.

Tom, #1 means no improvements are required of the seller("as-is")and that your offer is null and void if the proper rezoning or variance is not obtained. I find it curious it's not specified which of you has to pay for those costs. #2 likely means exactly what you state. I hope this helps.

-- Gary in Indiana (gk6854@aol.com), February 11, 2002.

I think the best advice is to run this by an attorney that specializes in real estate law. The cost will be small compared to the headaches and losses that are possible. This also give you a recourse if something goes wrong, later on.

-- BC (desertdweller44@yahoo.com), February 11, 2002.

Tom, I think here in Michigan the Land Contract laws are much better than in other states. I have bought and sold on L/C all my life. Be sure that your land contract is recorded. If it is recorded, a mortgage in excess of what you owe the seller (made by them) is against the law. The seller can mortgage up too the amount that you owe him or he can discount your contract to someone who buys them after yours is "seasoned" but he can not jeopordize your interest.

I take it you are purchasing this for commercial use?? I would hope that there is some sort of time limit involved as these variances can be terribly time consuming, especially if the variance is opposed. If you have some sort of idea of when you wanted to start a business,and it is soon, this property might not be your best choice.

-- diane (gardiacaprines@yahoo.com), February 11, 2002.

Tom,

What you are asking for is a legal opinion. For this you need a real lawyer.

There is a great deal of difference from state to state in real estate law as it applies to Land Contracts. I am a real estate broker in Ohio, and the difference from your state to mine is no less than awesome. Now that said you are asking for a specific opinion on language that none of us have read or seen. Most of us are not qualified to give you an answer, and even a lawyer will not guarantee that the answer is correct, that is why we have judges and juries.

Any answers that you get on this forum will be well worth what you paid for them.

-- Ed Copp (OH) (edcopp@yahoo.com), February 12, 2002.