Land and Lot Transactions Are More Complex

Posted on July 11, 2016 by

Land and lots just sat on the market for years during the last economic down turn and now are a hot commodity on this hot market.   What most people do not realize is that land is a much more complex transaction.  

PROPERTY

How large is the property?  Typically a lot is sold with an individual price for the entire parcel.   Larger tracts are often sold at a price per acre times the number of acres.   Properties in downtown areas with high density zoning are sold by the square foot, so a couple of inches will change the price. 

ZONING

First, what is the highest and best use?   Determine first whether the property in the city or in the county. If it is in city limits, go to the city’s zoning ordinances.  If not, go to county zoning.   Is it residential, commercial, or agricultural? What is the zoning on the property? Zoning is usually stated on tax records.  Unfortunately, all the counties and cities in Georgia have their own zoning codes and what holds true about a zoning code in one area, is totally different in another.  Generally speaking, in order of density:

  • AG is Agricultural
  • R is Residential and SF is Single Family
  • MF is Multi Family or A is Apartment
  • C is Commercial
  • O-I is Office and Institutional
  • M is Manufacturing or I is Industrial

Many of these zoning categories will have a number following the letter denoting size of parcel, , units per acre, type of uses allowed, or height factors.  Zoning also will have everything to do with density that can be built in the land.  This could be the number of units per acre, or the height of a skyscraper.   

Once zoning is determined, I suggest looking at the future land use plan. Most of the cities and counties are following their future land use plan very closely.  So, for example, a low density residential area is never going to allow a conversion to office or a multifamily.  Typically. you can google the land use plans of most cities and counties in Georgia. 

OVERLAY DISTRICTS

Many cities and counties have overlay districts.  An overlay district is a layer of local planning regulation in the United States which incorporates the restrictions of whatever the underlying zoning is for a given geographic area and which identifies special provisions in addition to those in the underlying base zone. The overlay is superimposed over the conventional zoning with a physical area with mapped boundaries with written text spelling out requirements that are added to or in place of the underlying regulations.  

Communities often use overlay zones to protect special features such as historic buildings, wetlands, steep slopes, and parks.  Overlay zones can also be used to promote specific development projects, such as mixed-used developments with higher densities, tax abatements to encourage revitalization and renovation, or, affordable housing along transit corridors.  Many communities have adopted overlay districts for protecting aquifers for drinking water, too

SEWER_SEPTIC

Another key factor in land is, “Where are we putting the poop?”   Is it septic or is there sewer there.?  If sewer is not there, how far away is it?  Will the city or county, contribute financially to bring the sewer to your parcel, because of the size of development, or, number of jobs it will bring?  Building density has everything to do with sewer capacity.  A subdivision with sewer can get two to four times more units per acre than a subdivision that must have septic tanks. And, as far as septic tanks go, with the land perk for a septic tank.  Many times this is the determination of lot size as to where and whether the soil will perk .Having it tested would be part of your due diligence.

COVENANTS, CONDITIONS AND RESTICTIONS

Is the property in a neighborhood that has covenants, conditions, and restrictions.? Is there a fee associated with owning the lot?  If over 20 years have passed, these may have expired.  However, some neighborhoods readopt them, or amend them.  Therefore, architectural committees within the neighborhood may have to approve what you are considering building on the lot

WATER FEATURE

It is important in purchasing lot or land to determine whether the land has a water feature on it. In many cases, this will add value to the property.  In the case of use, a stream through the middle of a piece of property may make the entire piece unbuildable due to the entire parcel being in the 100 year flood plain, which no structure can be built in unless you pay the very expensive Flood Insurance from FEMA.   In Georgia in most cases, one cannot build closer than 75 feet from a flowing creek.  This is measured from the top of the bank.

The Atlanta Regional Commission (ARC) was created to protect the 2000 foot corridor on either side of the Chattahoochee River from Buford Dam downstream for 84 miles because of Lake Lanier Being a source of drinking water for the city of Atlanta. Therefore, there is a 50-foot vegetative buffer along the river, 35 foot vegetative buffer, along streams that flow into the river, and 150 foot impervious surface setback on any desired construction along the Hooch.

As far as a lake is concerned, if it is a Corps of Engineers Lake, like Lake Lanier, the Corps has marking on trees and in the ground that shows where the Corps line is and you must build above that line as the shore is technically owned by the Corps. Other lakes may have their own regulations from city or county, or even allow building Line to encroach into the lake.

UTILITIES

Any development or building is dependent upon utilities.   Check to see that the property can be served by electricity, natural gas, telephone, cable, city or county water, public sewer, and garbage collection.

NEIGHBORHOOD

In every neighborhood, outside factor can affect the land, or, future desirability.  Buyer should determine if there are noisy activities, odors, or unsightly items that can decrease value.   Are there any airports, power lines, cemeteries, prisons, stadiums, or quarries nearby?  What is the crime rate or is there a registered sex offender in the area (check www.gbi.georgia.gov)? I think it is worthwhile to check demographics, and if you have children in school, check school ratings.  For residential neighborhoods, the higher the school ratings mean higher the appreciation, and quicker sales.

SOIL

Soil is a concern for purchasing land or a lot.  Will the type of soil bear construction of a building, or, will it need additional reinforcement?  Sometimes fill dirt will need to be added or removed.   Are there any landfills, graves, burial pits, caves, mine shafts, trash dumps, or wells on the property that need to be addressed?   Sometimes soil settlement or drainage may affect property

Most lenders require a phase one or phase two environmental soil test.   This determines whether there are any underground tanks, toxic or hazardous substances such as asbestos, or other environmental contaminates like perk in the property which must be cleaned up in order to do any development or construction.

BOUNDARIES

Look at the property to see if there are any encroachments that may affect the property, like a neighbors fence, or, is someone been cutting across the land undisturbed for so many years, that they have a prescriptive easement.   Is there an unrecorded easement?

GOVERNMENTAL

Several things need to be addressed with lots and land concerning the government.  Has the owner received any notices from government or quasi-governmental agency that affects the property?  Is there a threatened legal action existing or threatened?  Are there violations of local state or federal laws, codes, or regulations with respect to the property?  Is the property use deemed Forestry or Agricultural.  Is it enrolled in a Conservation Use Program?

ROAD

The property must have access to be of value. Most city properties are served by paved roads which are built by a developer, and donated to county or city which takes over future maintenance.  Sometimes, a government will put in a road for the hopes of future development.  Otherwise, are there private or undedicated roads that would be the financial responsibility of the owner?   Is the road being widened or is there a median being built down the center which would affect ingress or egress?  (I lost a $1 million deal this year on a commercial tract because Forsyth County is putting a median down Hwy 9)

DEVELOPMENT

Development starts with a survey, topo, and an engineer.  The engineer will follow zoning ordinances with setbacks, minimum floor area, road building requirements and retention ponds to determine layout of the project, where to hook into sewer and other utilities, and where the storm water will drain.  A fire truck must be able to get down any road.  Once these drawings are acceptable, the governmental entity issues a Land Disturbance Permit (LDP) in order to move dirt for development.  Some entities require the developer to meet with an arborist for permission to remove trees.  Every item is checked by authorities as development progresses from one stage to the next.

CONCLUSION

Land and lot transactions are far more complicated than the usual residential single family sale.  To me, a lot of creativity goes into what can be done with the property as everyone will have a different vision as to what it can be.  As evidenced by all the aforementioned items, be sure to get a real estate agent the understand the intricacies of a land and lot development should you decide to purchase.

Deborah HarrisDeborah Harris is the hardest working Realtor in Atlanta and after 35 years, 1000 houses, 2000 lot sales, and 100’s of land and commercial deals, Deborah still loves real estate. She is a facilitator for various acquisitions, JV, site search, development. She has numerous awards (The Phoenix Award from the Atlanta Board of Realtors and Top Agent for Keller Williams International for April 2013), and dozens of designations. Deborah loves negotiating the deal, and is always striving to take her business to the next level.

Contact Deborah Harris

Share

Leave a Reply