Lot Loans

[Beach Runner]

New construction will be wind insurable.

You may want to take a lot loan that contains a future advance clause. It's a standard provision that may help you later. Many times the future advance provision totals twice the lot loan.

Thanks for the info!

 

[wrobert]

Are the problems the county is starting to see with incomplete infrastructure affecting the ability to finance yet? Buying a lot then finding out two years from now the county will not issue you a building permit has got to be a concern of people if they think about it.

 

[Franny]

Are the problems the county is starting to see with incomplete infrastructure affecting the ability to finance yet? Buying a lot then finding out two years from now the county will not issue you a building permit has got to be a concern of people if they think about it.

In this scenario it sounds like this couple bought to build their own home so there should not be a problem with financing. Building spec homes is a whole new ball game.

 

[wrobert]

In this scenario it sounds like this couple bought to build their own home so there should not be a problem with financing. Building spec homes is a whole new ball game.

I guess the scenario I had in mind is the lot is purchased with a five year balloon. The plan is to build a home in 3 years. Three years from now when they go to build their home they find they can not get a building permit. Now they have two years to get this straightened out or the balloon payment is due. Or they go forward with a construction loan, but I am sure that there are some time limits placed upon that.

I know five years seem like quite a bit but we already have places that have been out of compliance for a couple of years and the county is just now starting to take action against them. The county attorney stated at the last BCC meeting that the county had no liability in these situations, although others seemed to disagree.

 

[Franny]

Good points.

 

[AAbsolute]

I guess the scenario I had in mind is the lot is purchased with a five year balloon. The plan is to build a home in 3 years. Three years from now when they go to build their home they find they can not get a building permit. Now they have two years to get this straightened out or the balloon payment is due. Or they go forward with a construction loan, but I am sure that there are some time limits placed upon that.

I know five years seem like quite a bit but we already have places that have been out of compliance for a couple of years and the county is just now starting to take action against them. The county attorney stated at the last BCC meeting that the county had no liability in these situations, although others seemed to disagree.

The first home I built in Rosemary Beach had no water or power when we began construction because the utilities weren't to our phase of the neighborhood. I would think it's not part of reasonable due dilgence to verify the existance of working utilities when you buy a property that has stub-ups visible when you close on the property.

I've seen the same type of situation in the newest phases of other communities here as well. It will create a liability situation for the Developers, the County and probably Regional Utilities who collects water and/or sewer tap fees at closing as next year unfolds.

I remember the HillsByTheBeach thread where she had a client who bought property under an infrastructure bond that expired later leaving the bank and owner with property without ingress/egress.

 

[traderx]

I am surprised that you were able to pull a permit without utilities to the site. Was that a mistake by the county or typical MO?

 

[AAbsolute]

I am surprised that you were able to pull a permit without utilities to the site. Was that a mistake by the county or typical MO?

The County Building Dept. has prerequisites for permits that include Water and Sewer availability letters. That has a subtle distinction between functioning services and their availability. We have permitted homes with payment of $6,800+ water and sewer tap fees paid and at CO come to find that we had to assemble a shallow well to pressurize our plumbing system for the final inspection. This happens most in a new phase of a development. There is quite a difference even in a community's water main that is pressurized and a water main that has been certified by the DEP to deliver water to a home.

These types of conditions can mislead the best banks at the point of sale of purchasing a lot, let alone an out of State lot buyer who doesn't possess extraordinary experience levels. Who would even think to ask, "I see the water and sewer stubs. Has this system passed its DEP Certifications for use?"

 

[simmy587]

Hi Wavedreamdave,

I am sure bank finance vacant lots. All you need to do is find a legitimate and reliable real state agent to talk get a deal with and know all information you want to know.