You have heard the expression “Sounds too good to be true” and this is usually a correct statement unless you do your homework and know all the facts before making a purchase.
When buying property you should expect to promptly receive detailed information on the property. It should include a location map, topographical map, and loads of information about topography, streams, views, wildlife, area information, surrounding towns, type of deed and clearly stated seller financing options that are available. If the seller does not provide financing you can assume the person is in it for the fast buck or quick sale.
Here are the most important guidelines that will help with your land purchase:
1. Expect an official warranty deed. Your land should have an official warranty deed. Do not be fooled in to purchasing an out of state deed, special warranty deed or quitclaim deed. These deeds do not guarantee clear title and even if offered with “title insurance” the title insurance only covers during the particular conditions of that deed.
a. Special Warranty Deed. A deed in which the grantor warrants, or guarantees, the title only against defects arising during the period of his or her tenure and ownership of the property and not against defects existing before that time, generally using the language, "by, through or under the grantor but not otherwise."
b. By comparison, a grant deed (or in some U.S. States, a warranty deed), which is normally used for real estate sales, contains certain warranties that vary from State to State. A general warranty deed is a type of deed where the grantor (seller) guarantees that he or she holds clear title to a piece of real estate and has a right to sell it to you. The guarantee is not limited to the time the grantor owned the property—it extends back to the property's origins. A General Warranty Deed includes six traditional forms of Covenants for Title. Those six traditional forms of covenants can be broken down into two categories (1) Present Covenants and (2) Future Covenants.
c. A quitclaim deed is a term used in property law to describe a document by which a person (the "grantor") disclaims any interest the grantor might have in a piece of real property, and passes that claim to another person (the grantee). A quitclaim deed neither warrants nor professes that the grantor's claim is actually valid. Quitclaim deeds are sometimes used for transfers between family members, gifts, or to eliminate clouds on title, or in other special or unusual circumstances. Of the different types of deeds, the quit-claim has the least assurance that the person receiving it will actually get any rights.
***Make sure that the seller is the recorded legal owner of the property by asking for a copy of the warranty deed which verifies legal ownership.
2. Water Rights: Why are they important?
Water rights allow a property owner to drill a well. Many properties are sold with deeds that do not include water rights. Without water rights a property owner must put a holding tank on their property and contract a company to bring the water.
3. Finally, when buying land insist that it be accessible either from legal right-of-way or state/county maintained road. It is highly unwise to purchase a property which does not have either state/county maintained road frontage, or a deeded right-of-way.
Lastly, here are a few points to take in consideration when deciding on buying land.
1. Make a list. If you are planning to purchase a land tract, one thing is for sure - you have your reasons. What are they? Write down your primary purpose for buying, then list all the features and amenities you hope to find.
2. Evaluate your financial commitment. Decide how much you plan to spend on a property and whether you will require financing to achieve your objectives. Know how much cash you have available up front.
3. Evaluate your emotional commitment. Before you begin looking at land, be certain you and other family members involved in decision making are fully committed to a land purchase. If not, wait until a solid decision to buy has been made before beginning your search. This will save both you and the seller from a lot of headaches.
4. Be prepared to act. Because it is not possible to make comparisons, another method is required for decision making. With financial considerations and a firm commitment to buy in place, be prepared to act when you find a property which meets your expectations. If you miss the opportunity to tie up that perfect piece of heaven because you hesitated, you will not be able to go down the street and see another like it. In other words - be ready to say "YES!"
Buying land in Colorado
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May 27, 2007
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