Tag Archives: land
How Important is a Land Survey when Purchasing a Home in Montgomery, AL
When purchasing a real estate, most mortgage lenders will require that you obtain a Montgomery land survey in order to acquire the money that’s needed to purchase the home. A land survey is the licensed individual that prepares the survey for the property. This survey serves as a legal depiction of the property in a graphical format, and allows you to see each of the features of the property from a top-down perspective.
There are various types of surveys that show improvements to the land, including the home and garage, as well as the size of the lot or land where the home is located. If there are any uneven boundaries or variances, they are stated in the Montgomery survey. While preparing the survey, the individual performing the check will pour over court documents and records, taking legal documents into account including deeds and land documents from the county recorder’s office. The survey will also include property measurements.
Legal Aspects – When there are property disputes between two parties, a survey is necessary to determine where your land ends and the land of a neighbor begins. As the buyer, you can use a survey to easily address items owned by adjoining property owners that may be interfering in your own property. The survey in Montgomery can be used as court evidence in boundary and property disputes.
The survey is important from a legal standpoint because it can help you determine if you’re legally allowed to add features to your property once it has been purchased. For example, a large item like a pool can actually infringe on the property of a neighbor if you have uneven property lines. If you build a structure that crosses the property line of your neighbor then you are exposing yourself to a potential lawsuit and the expenses of having to move the item – or pay to leave them there.
Restrictions – Some areas also have restriction that can have an effect on the property you’d like to buy. Zoning restrictions are in place to keep areas uniform and developed within specific ordinances. Violating a zoning restriction can lead to heavy penalties as well as legal action from local authorities. A survey in Montgomery would list all the potential problems that can arise from zoning when the final data is compiled.
Building restrictions are imposed by local authorities or the developer of a property about how structures on that property can be built – a garage for example. The individual performing the land survey will be able to examine records on the property relating to building restriction and can determine if you are buying a property that is subject to restrictions of this kind and if it’s currently in violation of any restrictions. The most common restriction is the setback or how far the home is from the front and sides of the lot. In some cases, though not all, you can apply to have restrictions waved before purchasing property.
Commercial Construction Loan Financing Tips
Many brokers will encounter clients who require construction loan financing, some more than others. Commercial construction loan financing is usually required by developers and investors who purchase land that they would like to develop or are purchasing fully developed land in the form of a single or several ready to build lots. Land with an existing home or structure on it is most often referred to as “infill construction”. In the event that a builder is simply improving an existing structure including for example a top up (second storey) or remodelling, we refer to this type of construction as a renovation. All of these examples most often require construction funding and apply to either residential or commercial real estate.
There are several different types of construction loans. When a builder or developer acquires land for development they will seek out a land loan often combined with a facility for land development. The land loan serves to close the land purchase while the development loan serves to fund the planning and development of the land so as to improve it for greater use such as residential or commercial zoning from agricultural for example. Following the acquisition and initial development a developer or builder will require financing to service the land which includes the installation of sewer, water and hydro and will require a land servicing loan. The next round of financing is usually to a builder unless the builder and the developer are one and the same. The builder will require a construction loan to build either a residential or commercial building.
Here are some quick tips you may want to keep in mind if you are representing a client who requires development or construction loan financing.
Lenders who offer construction loan financing will always hold back 10% from every advance in accordance with the Construction Liens Act save and except an advance on land. Borrowers need to be made aware of this for budgeting purposes at the outset to ensure that there is no confusion in the future.
It is important that your client has a good budget that includes a detailed breakdown of hard and soft costs and includes the interest reserve in the soft costs.
Be prepared to use a quantity surveyor whose job will be to approve the budget on behalf of the lenders and provide reports on progress of construction to the lender that certifies every advance in accordance with the budget. For smaller residential construction loans some lenders will use an appraiser to report on progress.
In almost all cases, lenders will lend construction loans on a “cost to complete” basis. This means that the funding program will be advanced in progress draws and will also be subject to 10% holdbacks in accordance with the Construction Liens Act as previously mentioned. This ensures that there is always enough money in the remaining budget to complete the project.
The presence of a first mortgage that was obtained for construction purposes can create a challenge if your client plans to obtain second mortgage financing as the second mortgage lender would be required to postpone every advance under the first mortgage or construction loan that has priority on title.
Offering commercial construction loans can be very lucrative for a mortgage broker or agent. An opportunity to arrange this financing is an excellent opportunity to learn about how you can diversify the range of products you are able to offer to your clients. Either co-brokering the deal through an experienced broker who specializes in construction financing or working with a construction loan financing lender who is willing to educate you and walk you through a project is a great way to gain experience and to be able to offer this type of financing to your clients.