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BOOK OF EXPERTS: Buying land – how certain property details might impact your loan

BOOK OF EXPERTS: Buying land – how certain property details might impact your loan

As cities continue to grow in population, land ownership is becoming more attractive. But finding the property and making it your own can sometimes pose challenges. Farm Credit are experts in land financing. Below, we go over common property details and how it might affect your land loan.

Land Surveys

One of the first steps, in addition to touching base with your local Farm Credit loan officer, is to identify the land. That may seem obvious but when dealing with land parcels surprises sometimes pop up. Identifying the land is super simple if you’re buying a piece of property that is already identified by a tax parcel number or a survey, but other situations can be somewhat more challenging.

When you buy a piece of property, a survey should exist that is used to provide a description of the parcel, but sometimes the surveys are dated and raise questions about the exact acreage. That’s when it’s good to get a new survey. Often, we have people who find 50 acres for sale but they want to carve out only 15 acres. This makes the preapproval process difficult if the 15 acres you’d like to purchase are not legally identified out of what is called the “parent tract”. Getting a new survey of the land is required in this circumstance as well.

Water Tests, aka 'Perc Tests'

If you plan to build a home, a perc test will be needed. A percolation test determines the water absorption rate of the soil in preparation for building a septic drain field. Even if the land you are purchasing is for farming and may not include a home, a conversation with the seller about any water issues may be in order. For certain farming operations you want to ensure you have ready access to water on your property; having to add a source of water can be a large, unexpected expense.

Zoning Requirements

Another consideration is to make sure you meet the planning and zoning requirements. Every county requires different things, so to identify the right piece of property for your needs can sometimes take a few more steps than pointing at a map and saying, “This is it!”Contact your local county courthouse to discuss their planning and zoning requirements on raw land. 

Accessibility and Easements

Property accessibility may seem obvious but as larger parcels may be cut up and sold, you need to make sure you can easily access the land. The easiest situation is to purchase land that touches a state-maintained road to ensure legal access to your property. If the land does not touch a state-maintained road, it’s important to learn whether the property has legal access to it, most likely by an easement. This may require obtaining an attorney to research property deeds. 

Lenders need to know the buyer has a legal and physical access point to the piece of property, and these need to be one and the same. Easement battles can be quite difficult because people understandably don’t want to give up ‘their property’ rights. Someone may have a legal easement and not a physical easement. This means that they would have to clear the way and establish a road to reach their property, which can become very expensive. Being aware of such pitfalls and doing research early on can help head off unwanted surprises.

Farm Credit is the Expert in Financing Land

Whether you want to buy land to build a home, farm or hunt, Farm Credit can finance your unique needs. Our passion is to grow farmers, families and rural communities. AgSouth Farm Credit and ArborOne Farm Credit are agricultural lending cooperatives owned by its member-borrowers and is part of the nation-wide Farm Credit system. We provide loans for land, production agriculture, farm equipment, crop insurance, leasing and home mortgages in South Carolina.

AgSouth Farm Credit

Serves the Upstate and Lowcountry

ArborOne Farm Credit

Serves the Pee Dee region