Located in the second paragraph of the Declaration of Independence, Thomas Jefferson states the following: “We hold these truths to be self-evident, that all men are created equal.” As an aside, I’m pretty sure he meant “equal” not “the same.” We are not clones of each other. That would be boring and, frankly, unattractive. He goes on to list the ways in which we ARE equal: “that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the Pursuit of Happiness.”
This week, it seemed apropos to use the equality analogy. While all men (and women) are created equal in the specific terms set forth, the same could be said for property — again, with specific terms set forth. Simplified, all real property is of a permanent and immovable nature. This includes the land and all the rights and profits attached to the land. These are the specific terms in which all real property is equal.
A few weeks ago, I began working with some past clients of mine who had moved to a different state and have finally found the light and decided to come back home. They found the perfect lot that they want to build on. The price of the lot is listed at $154,500. It is a decent size on a hill that would give them amazing views of the mountains and valley. They have a house plan they like and wanted to move forward on the lot.
As it turns out, people have many more similarities than property. Whereas all property is permanent and immovable, not all lots are easy to build on. When I sat down with my clients to be sure they were informed of all the particulars of this lot, they were less than pleasantly surprised. The lot can certainly be built on, it is in a subdivision surrounded by other vacant lots as well as new builds. However, the subdivision does have specific architectural requirements that are minimum standards when building a home in the area. These requirements are part of the “CC&Rs,” short for codes, covenants and restrictions, which have been drafted by the HOA, i.e., the homeowner’s association. These CC&Rs include, but are not limited to: a defined minimum square footage, detailed types of building materials used on the exterior, as well as minimum specific landscaping, including the time that the landscaping must be completed by.
While my clients assured me that they wouldn’t have any problem complying with any of this, since the home they were building would fit all these requirements anyway, I burst their bubble when I also informed them that the impact fees have not yet been paid.
Many people are not aware of impact fees. These are fees that are assessed by local government in a new development or project to pay for the costs of providing public services. In other words, if they want plumbing, electrical and gas in the home, they are going to have to pay these fees. Most people see these luxuries as mandatory minimum requirements. For the record, local government never has a sale on these fees, and they are not minimal. Sometimes, the fees have been paid by the developer, but it is best to find out before purchasing a lot, as it can run into many thousands of dollars.
Once we had worked through all the details on the lot, it occurred to me that this property was also located in that same subdivision that had a connection fee for secondary water. I told my clients that it was a possibility and I would get the lowdown. Well, the lowdown ended up being $46.00 a square foot. That added up to about $11,500 for this lot.
When it comes to vacant land, it can quickly become quantum math. When is $154,500 actually $217,000 and some change? The fact is, it is still permanent and immovable. The stuff that really counts is all the same. This is going to be a great place to build a home.