Buying Property and Building Your Own Home - Tips, Tricks, Advice

[DETRoadster]

Tip of the day for everyone. Actually READ your closing documents. Title company was Fing worthless. I was shocked at how much they screwed up. They had the selling price wrong. I mean come on, that's like the single most important number in the whole 50 pages. Not only was it wrong on the settlement sheet it was also wrong on the county tax filing document. Bunch of amateurs!

[vreihen16]

Anyone have experience with owner's title insurance in a cash sale for land? Seems like a no-brainer, but wondering if there are any gotchas.....

[DETRoadster]

Originally Posted by vreihen16

Anyone have experience with owner's title insurance in a cash sale for land? Seems like a no-brainer, but wondering if there are any gotchas.....

In WA (this may be the same everywhere) the land seller pays for the title insurance. In our transaction, the seller apparently sprung for a better title insurance package called the "ALTA" title insurance. Our agent said that was a good thing.

Not sure if that helps at all, but that's the extent of my knowledge.

[mantis]

well, looks like i might be joining this club. when shopping for acres in arizona this weekend. price is cheap, you own water and mineral rights, gun laws are looking to be in the right mindset for me, so might be trying to get my first 10-40 acres.

im a general contractor in California, so might be looking to get lic in AZ too and maybe buy and develop other areas around me as a business to support the building of my property.

this would be my first ever land/home purchase im 46

[vreihen16]

Originally Posted by DETRoadster

In WA (this may be the same everywhere) the land seller pays for the title insurance. In our transaction, the seller apparently sprung for a better title insurance package called the "ALTA" title insurance. Our agent said that was a good thing.

From what I can tell from online articles, the common arrangement in SC is for the lending bank to make the buyer pay for their "lender's title insurance" as a closing fee. This policy only protects the bank in case of title defects, and only pays them the amount of their loan.

Buying "owner's title insurance" is optional, and 100% on the buyer. It protects you from someone coming out of the woodwork and claiming full or partial title to your land from events in the past, from things like contested estate settlements, liens, judgements, etc. There is also a premium add-on that covers encroachments, right-of-ways, survey errors, etc. No way would I close without at least the basic owner's title insurance.

FWIW, we spoke with the listing agent this morning, and will likely be taking a road trip this weekend to walk this lot and maybe a few others in the area.

My next area of research is whether we want to close with the property in our names, a trust, or set up an LLC? I'll probably wind up talking with a SC real estate attorney for advice on this.....

[DETRoadster]

Originally Posted by vreihen16

From what I can tell from online articles, the common arrangement in SC is for the lending bank to make the buyer pay for their "lender's title insurance" as a closing fee. This policy only protects the bank in case of title defects, and only pays them the amount of their loan.

Buying "owner's title insurance" is optional, and 100% on the buyer. It protects you from someone coming out of the woodwork and claiming full or partial title to your land from events in the past, from things like contested estate settlements, liens, judgements, etc. There is also a premium add-on that covers encroachments, right-of-ways, survey errors, etc. No way would I close without at least the basic owner's title insurance.

FWIW, we spoke with the listing agent this morning, and will likely be taking a road trip this weekend to walk this lot and maybe a few others in the area.

My next area of research is whether we want to close with the property in our names, a trust, or set up an LLC? I'll probably wind up talking with a SC real estate attorney for advice on this.....

I thought you said it was a "cash sale"? Ie, no bank involved. We paid cash for our property so a lot of the complexities you mentioned about banks being covered on their investment didnt apply. Tricky to get a bank to finance a land deal. They want a lot down and their rates are generally pretty terrible. Vacant land can be slow and difficult to unload and banks dont want to get stuck with it. The prices and conditions reflect that.

Tell us more about your LLC or trust idea. Why? What's the benefit? Too late for me but I'm curious about your angle. I assume it's some sort of risk mitigation?

[kscarrol]

Originally Posted by vreihen16

FWIW, we spoke with the listing agent this morning, and will likely be taking a road trip this weekend to walk this lot and maybe a few others in the area.

My next area of research is whether we want to close with the property in our names, a trust, or set up an LLC? I'll probably wind up talking with a SC real estate attorney for advice on this.....

SC = South Carolina? We are looking there are well, heading up in June to poke around.

[vreihen16]

Originally Posted by DETRoadster

I thought you said it was a "cash sale"? Ie, no bank involved. We paid cash for our property so a lot of the complexities you mentioned about banks being covered on their investment didnt apply.

I'm also paying cash. When we bought our current house, the bank took care of the title/insurance details for us. Without a bank at the table this time, I want to confirm that I don't need to buy the "lender's" coverage in addition to the owner's coverage to have complete coverage.

Tell us more about your LLC or trust idea. Why? What's the benefit? Too late for me but I'm curious about your angle. I assume it's some sort of risk mitigation?

Trusts are used in estate-planning, where the assets are placed in a trust's name. If you want to change ownership, you can modify the trust without having to file deed/tax changes that cost $$$$ (and ironically voids your title insurance coverage). Plus, it allegedly avoids inheritance taxes in states/amounts where it is applicable.

An LLC is more frequently used in commercial real estate as a liability shield, so that claims against one property cannot go after others. I know that all of the commercial real estate investors here use them, and I have read that they are also used in some residential situations.

Anyway, since I'm not even positive that I will still be alive to build on this lot and we have no kids to inherit it, I want to consult with a RE attorney to see what makes the most sense with the possibility that I will be on the hook for liability on a piece of land that's a day's drive away from me that may wind up being flipped and never built on.....

[vreihen16]

Originally Posted by kscarrol

SC = South Carolina? We are looking there are well, heading up in June to poke around.

Yes. We're looking in the Midlands, along the I-77 corridor between Columbia and Charlotte. My DW and I are not beach people, and I want to be far away from the SC/GA low-country flooding.....

[DETRoadster]

Originally Posted by vreihen16

I'm also paying cash. When we bought our current house, the bank took care of the title/insurance details for us. Without a bank at the table this time, I want to confirm that I don't need to buy the "lender's" coverage in addition to the owner's coverage to have complete coverage.

Trusts are used in estate-planning, where the assets are placed in a trust's name. If you want to change ownership, you can modify the trust without having to file deed/tax changes that cost $$$$ (and ironically voids your title insurance coverage). Plus, it allegedly avoids inheritance taxes in states/amounts where it is applicable.

An LLC is more frequently used in commercial real estate as a liability shield, so that claims against one property cannot go after others. I know that all of the commercial real estate investors here use them, and I have read that they are also used in some residential situations.

Anyway, since I'm not even positive that I will still be alive to build on this lot and we have no kids to inherit it, I want to consult with a RE attorney to see what makes the most sense with the possibility that I will be on the hook for liability on a piece of land that's a day's drive away from me that may wind up being flipped and never built on.....

Got it. I don't think you'll need that extra coverage as there's no bank involved but let me know what you find out. Will be interested to see if I missed a step.

Dang, that's a great idea on the LLC. My wife and I both have LLCss. Dang.

I was also worried about liability on a property that out of sight and after consulting with my insurance company and a close friend who is in the insurance business I learned that if it's truly vacant (no structures of any kind) your current homeowners will cover you. As soon as you put up a shed, for example, you need a dedicated policy. We've got no structures on our lot so our homeowners will cover us, however, I used this as a good opportunity to finally get an umbrella policy in place just in case. I also put up "private property no trespassing" signs every 50 feet on all sides just so no one can say I didn't warn them.

[kscarrol]

Very nice! We are looking further west in the Greenville area and as far north as south Asheville. Had an empty lot in Asheville but decided to not build so sold that and will be looking houses.

[unluky]

Originally Posted by vreihen16

I'm also paying cash. When we bought our current house, the bank took care of the title/insurance details for us. Without a bank at the table this time, I want to confirm that I don't need to buy the "lender's" coverage in addition to the owner's coverage to have complete coverage.



Trusts are used in estate-planning, where the assets are placed in a trust's name. If you want to change ownership, you can modify the trust without having to file deed/tax changes that cost $$$$ (and ironically voids your title insurance coverage). Plus, it allegedly avoids inheritance taxes in states/amounts where it is applicable.

An LLC is more frequently used in commercial real estate as a liability shield, so that claims against one property cannot go after others. I know that all of the commercial real estate investors here use them, and I have read that they are also used in some residential situations.

Anyway, since I'm not even positive that I will still be alive to build on this lot and we have no kids to inherit it, I want to consult with a RE attorney to see what makes the most sense with the possibility that I will be on the hook for liability on a piece of land that's a day's drive away from me that may wind up being flipped and never built on.....

Exactly this. When my father passed he had his property in a living trust that transferred to us kids immediately upon his death with no probate or taxes (about a million dollars worth of land, so under the fed limit too) - it was a super easy process. Then we got the property assessed and that allowed us to reestablish our tax base. So if we for instance decide to sell - we would not owe capital gains on the difference from the $900 per acre he paid for it to the $6,500 per acre (or more) it assessed at now. That is obviously a HUGE savings.

Since there are 2 owners, we also created a LLC to hold the property in so as to protect each of us from anything happening on the land AND protecting the land if anything happens to either of us individually. We cash rent the land, so this is also the vehicle where the renter pays to and we get paid from the LLC directly. Adds some nice layers of protection for us and from each other. Requires some yearly partnership filing and crap like that - but it is all pretty easy and we have been happy with the arrangement.

We also set up some partnership rules (who can write checks, limit for both to have to sign them, etc.) so gives a lot of peace of mind.

[vreihen16]

Originally Posted by kscarrol

Very nice! We are looking further west in the Greenville area and as far north as south Asheville. Had an empty lot in Asheville but decided to not build so sold that and will be looking houses.

I'm looking for land to build our proper retirement garage with a bedroom attached. We live in a small 2BR house in the woods now, and trees make good neighbors is my mantra. I don't want to be anywhere near an HOA, and have no lawn if I can get away with it. Oh, and a driveway so long and wooded that not even trick-or-treaters and Jehovah's Witnesses would walk up it! A steel barndominium is ideal for us, with an etched concrete slab and room to park cars in the living room or drive into the kitchen to unload groceries. Think Jay Leno's garage, sized for the middle class.

My SC search criteria was to find a depressed area, where property is cheap because there's no work. As a retiree (or WFH), local jobs don't matter. Seeing that the county I'm looking at has rural municipal water and gigabit fiber to the home even 15-20 miles outside of town, it has most everything that I would want. Knowing that Wal-Mart closed up their Supercenter because the county couldn't generate enough store traffic makes it even better to me.

My DW and I are not beach people, and I don't want to be near the coast or SC/GA low-country hurricane/flood risks. The crazy real estate market in Asheville has pushed Greenville and the western part of SC out of my price range and with almost NY-type property taxes. Plus, we'd both rather not see snow again in our retirement years. The I-77 corridor between Charlotte and Columbia has a lot to offer for our specific needs and future plans.....

[kscarrol]

Understood re: western prices, good luck with you search!

[vreihen16]

Originally Posted by kscarrol

Understood re: western prices, good luck with you search!

Ditto to you in your search!

I've got a rental car reserved for the trip, pet resort booked for our OCD psycho dog, and time off approved for both of us to leave early Friday morning. The only thing that I'm missing is hiking boots to walk a possibly snake-filled wooded lot, and I may just stop at Cabelas south of Charlotte and pick up something on the road.....

[Bonk!]

Watching a local builder show - Azec has an exterior corner board that has no seams. I've never seen it before but it's cool because it never needs to be painted, it won't leak, it can be powerwashed and it doesn't look like vinyl. It looks like they also have window trim kits but I didn't catch that segment. https://azekexteriors.com/products/t...s/cornerboards
https://azekexteriors.com/solutions/window-surrounds

[vreihen16]

Just got back from SC an hour ago. We are starting the offer paperwork for a 5 acre lakeside parcel with a lot of character tomorrow morning. Crossing my fingers that all of the paperwork is in order and we can close quickly once the offer is accepted.

We don't have any plans to build right away, but at least we'll have a location locked in and can start the site-planning process.....

[kscarrol]

Originally Posted by vreihen16

Just got back from SC an hour ago. We are starting the offer paperwork for a 5 acre lakeside parcel with a lot of character tomorrow morning. Crossing my fingers that all of the paperwork is in order and we can close quickly once the offer is accepted.

We don't have any plans to build right away, but at least we'll have a location locked in and can start the site-planning process.....

Congrats!! Any details on where?

[DETRoadster]

Originally Posted by vreihen16

Just got back from SC an hour ago. We are starting the offer paperwork for a 5 acre lakeside parcel with a lot of character tomorrow morning. Crossing my fingers that all of the paperwork is in order and we can close quickly once the offer is accepted.

We don't have any plans to build right away, but at least we'll have a location locked in and can start the site-planning process.....

Congratulations! That's amazing!

[vreihen16]

Originally Posted by kscarrol

Congrats!! Any details on where?

Near I-77, between Columbia and Charlotte.

In case anyone was curious, the seller accepted our offer and we are officially under contract! Let the due diligence begin.

Interesting thing in SC with a cash sale is that the buyer's attorney handles procuring the title search and insurance. It is apparently also common for the seller to use the buyer's attorney for the closing, which I find a bit odd because I'm a believer in multiple eyes.

Anyway, I have a suggested list of local real estate attorneys to check with, to see which one I feel most comfortable with retaining.....

[vreihen16]

Originally Posted by DETRoadster

I was also worried about liability on a property that out of sight and after consulting with my insurance company and a close friend who is in the insurance business I learned that if it's truly vacant (no structures of any kind) your current homeowners will cover you. As soon as you put up a shed, for example, you need a dedicated policy. We've got no structures on our lot so our homeowners will cover us, however, I used this as a good opportunity to finally get an umbrella policy in place just in case. I also put up "private property no trespassing" signs every 50 feet on all sides just so no one can say I didn't warn them.

I spoke with my current insurance agent. He said that as long as the property is 100% vacant of ANY improvements, my NY State homeowner's policy would cover liability even on out-of-state land. He also said that something as trivial as a utility pole outside the boundaries of the road right-of-way and shoulder easements was enough to negate this coverage, and suggested that I check everything carefully.

A quick trip to my search engine du jour revealed several anecdotal posts about insurance companies refusing to pay out on special vacant land policies because of minor things. One case was a small abandoned underground locker, and another one involved an ancient house foundation. Would someone else installing a duck blind or tree stand for hunting void the coverage? Heck, does the real estate agent's for sale sign count as an improvement?

If I were you, I would check with your insurance agent to see if those "no trespassing" signs count as a man-made improvement and void your coverage. I'm also curious if the "purple paint law" is also verboten, if your state has it on the books.

At some point in the past, someone dropped a culvert pipe into the roadside ditch to facilitate a future driveway at the lot I've got under contract. I have enough fear that this could void my "vacant" liability coverage that I'm going to reach out to a SC insurance agent and see what non-vacant coverage will cost me.

On a side note, a relative of mine received a $32,000 bill from the forest rangers in another state for extinguishing a small forest fire that they claimed originated on that relative's vacant wooded lot. I'll gladly pay for extra insurance.....

[DETRoadster]

Originally Posted by vreihen16

I spoke with my current insurance agent. He said that as long as the property is 100% vacant of ANY improvements, my NY State homeowner's policy would cover liability even on out-of-state land. He also said that something as trivial as a utility pole outside the boundaries of the road right-of-way and shoulder easements was enough to negate this coverage, and suggested that I check everything carefully.

A quick trip to my search engine du jour revealed several anecdotal posts about insurance companies refusing to pay out on special vacant land policies because of minor things. One case was a small abandoned underground locker, and another one involved an ancient house foundation. Would someone else installing a duck blind or tree stand for hunting void the coverage? Heck, does the real estate agent's for sale sign count as an improvement?

If I were you, I would check with your insurance agent to see if those "no trespassing" signs count as a man-made improvement and void your coverage. I'm also curious if the "purple paint law" is also verboten, if your state has it on the books.

At some point in the past, someone dropped a culvert pipe into the roadside ditch to facilitate a future driveway at the lot I've got under contract. I have enough fear that this could void my "vacant" liability coverage that I'm going to reach out to a SC insurance agent and see what non-vacant coverage will cost me.

On a side note, a relative of mine received a $32,000 bill from the forest rangers in another state for extinguishing a small forest fire that they claimed originated on that relative's vacant wooded lot. I'll gladly pay for extra insurance.....

I'm with you, the extra $ for extra security is so worth it. I'm already in violation of the "no structures" clause, IMO, because the property is surrounded by fencing. Little neighborhood Billy could scale that fence, fall, and break his little neck. Not going to mess about with that. Its on my "to do" list. for sure.