Buying land, whether to set up a farm, use it for cultivation, or simply build, may seem like an easy task. However, you have to take into account some factors that will determine a good purchase or not. Here are some of the main issues to consider before buying land.

Things to consider when buying land

Type of land use

First of all, it is important to ask yourself what is the objective that you want the land to fulfil. For example, it can be transferred for the use of the rustic property.

If it is a cultivation area, you can negotiate with the person who uses it for rent or ask for the percentage of the area that is cultivated. It can be interesting for both livestock and agriculture, taking into account that the primary sector is very lucrative. 

This would be related to being interested in what type of terrain it is. Make sure when you see the farm if it is fertile land or if it can be used for livestock.

Availability of water on the ground

Next, it would be interesting to know if you have water availability. Not all farms have a well, therefore, if it does, it is something that can give you autonomy. 

There are farms that have natural water spaces. Check if it is irrigated, if it has an irrigation concession and the volume and surface that can be irrigated and what is paid for it. An important factor when buying land is that it has water.

Terrain orientation

The next approach when choosing to buy a piece of land would have to do with its orientation, closely related to the weather. This will allow the winter not to be so cold and the summer not so hot. 

By having a more moderate climate, more types of products can be grown. For example, the south orientation will allow you to make the most of solar energy, so if your activity is going to be focused on agriculture, this factor can be very determined when buying land.

The next thing would be to check if the houses on the farm have a habitability cell. If they do not have it, at the level of regulations, only one compartment is allowed to store tools and belongings.

Land accessibility

When buying land, you have to pay attention to whether it has access to main roads. See if you have comfortable access, it facilitates communication. 

Before buying a piece of land you can see it from your computer using Google Maps and Street View. This way you can get an idea of ​​whether the land has access, its orientation, its surface, its proximity to the town, etc.

When buying land you must look if it is well connected with main roads

Right of Easement

When buying a piece of land, you must look to see if there is an established right of easement that would allow another person, apart from the owner, to use your land. 

There are many types of easements (of passage, water, aqueduct, etc.), the important thing is to know the exact location of the easement and to what degree it will affect your activity on your land.

Know the history of the land to buy

Before buying a piece of land, request a simple registry note and check the following aspects:

  • Check that the contract is really being made with the owner of the land and not with someone who does not have rights over that property.
  • Make sure that there is no charge or usufruct because it will be the usufructuary who has the right to use the property and therefore you will know if the person who sells has any limitations and if you can enjoy the property or have to wait for the usufruct to be fulfilled.
  • Check that there is no mortgage, lien, or easement when buying land.
  • See the real surface that the land has in writings.
  • Know the existence of a rustic lease and the number of debts (it serves to know the number of instalments by requesting a certificate from the seller to check if he is up to date with payments).

Know the real surface of the land

Once you have requested the simple note and you have verified the registry situation, you must do the same with the cadastral situation of the land to be purchased. 

You can do it through the cadastre page, but if you want a more detailed report, you can request the certification and verify that the data such as the real surface of the land and the ownership coincide with the data that appears in the simple note.

If both records differ, it is ideal to consult with a farmland mortgage agency. It is necessary to coordinate both the registration and the cadastre, therefore, if the surface is different at the time of making this sale, it will have to be coordinated with a georeferenced report of the plot. Secure your funding round before searching for land, ensuring you have the capital to finalize your purchase and potential development plans. This is a very important factor when buying land.

Know the type of soil

Depending on the town hall, the land will have some urban regulations or others. When buying land, it is important to consult the regulations to check if you are going to be able to allocate that land to your planned activities.

By law, there are three types of land: urban (property that has already been converted urbanistically), urbanizable (property that is not urbanised but can become urban ), and rustic (undeveloped land).

When buying land it is very important to take this into account, since you still buy land intended for living and later you realise that it is rustic and therefore you cannot build on it.

Budget when buying land

It is convenient to consider what the budget limit is when buying land and what tax burden you are going to bear both annually and during the purchase (aspects from the fiscal point of view). 

Tips when buying land

Now that you are clear about how to choose the land well, the time to close the deal is approaching, and for this reason, here are some final tips to make your purchase a success:

Sign a deposit contract

Before buying a piece of land, a preliminary step is carried out as a reservation, which is called a “deposit agreement”. The objective of this contract is to “reserve the purchase of land” in order to have enough time to manage the necessary procedures before another buyer arrives.

If the seller does not end up buying, you will have to return the amount of the contract and you will lose the value of the payment. Loan Against Property can be an option, explore alternative financing like construction loans if you plan to build on the purchased land, as it may offer better terms. If the buyer sells to another third party he will have to pay double the payment and will lose the contract.

Sign a purchase agreement

The last piece of advice to buy a piece of land is to sign the contract of sale. This must be done by a notary.

Conclusion

These are the main aspects and tips to keep in mind when buying land. Although it is not a factor that directly influences the capital gain of a property, having these documents in order and keeping up to date with service and property payments will affect the value of your land, since if at any time you decide to sell it, it will be much more convenient than one that is not in order and that will be a plus for any buyer. For successful land investment, “Investing Tips” recommends thorough due diligence, including zoning restrictions and potential development in the area.

Having legal certainty when buying your land will not only help you avoid any type of fraud that puts your investment at risk, it will also give you peace of mind by being sure that no inconvenience will arise in the future. 

Author’s Bio:

Jonathan is the founder of Agriculture Mortgages. He can help you to find and secure the best agriculture mortgage options to push your farm investment dreams to move forward. As a specialist mortgage broker with over 10 years of industry knowledge, he has helped new farmers, existing farmers, and rural business owners across the country.