After all your hard work—finding and evaluating the property, plus negotiating the deal—it’s finally time to close on the land!  Well, almost…

Step 5: Close on the Land

Before you close on the land, there are several important steps that must take place.  They are as follows:

  • Secure the actual land or construction loan, and not simply a pre-approval.  (See “Step 1: Obtain Financing” for more information about these types of loans).
  • Get a legal description for the land
  • Have an appraisal
  • Obtain a clean land title

These steps normally take about 30 days (but could take longer if there is difficulty finding an appraiser or a problem with the title).  Detailed information about each of these is below.

Legal Description of Land for Sale

The legal description of the land for sale gives details about the land’s location and boundaries. Because the land isn’t part of a neighborhood, the description is a series of directions and distances, starting from a known point, that describes the outline, or boundaries, of the land.  Thus, this is a very important reason to hire a surveyor.  This professional can create the legal description of the land for you.  (Remember that you can ask the seller to pay for a pin survey.  See “Step 4: Negotiate Price” for more information.)


The lender will require an appraisal of the property.  The appraiser will use sales data from comparable properties (“comps”) to develop an appraised value for the land for sale. This helps the lender compare the value of the land to the loan amount.

The lender is concerned about the potential of getting their money back; therefore, they want to ensure the land will sell for enough to pay off the loan in the unfortunate case that you default.

Also, since the lender is not likely to lend 100% of the cost to buy the property, they’ll use the appraised value to calculate the amount of the loan.

In most cases, they’ll lend anywhere from 60 – 70% of the appraised land value.  That means, you’ll have to come up with the difference in cash.  Also, you will be responsible for the appraisal fee, which is usually around $400.

Land Title

The lender also requires a clear land title.  Thus, the final step is for the lender to order a title commitment from a title company.  This ensures that the land you want to purchase is legally owned by the person selling it.

At closing, the title company will provide title insurance (of which you are required to pay).  Title insurance is an actual insurance policy that will pay off the loan if a problem arises regarding the legal ownership of the land.  These issues are very rare, though.  The attorney for the title company scours the land’s ownership history to make sure the person who claims to own the land really owns it outright, with no one else having any kind of claim on the land.

Again, you will be required to pay for the title insurance.  This fee will be included in your closing costs.


As previously states, the steps above typically take about 30 days (if there are no issues).  Once these steps are complete and your loan is approved, you’ll head to close on the land.

Closing is managed by the title company.  They provide an agent who consolidates all the documents required by the lender.  This agent also handles the land title documents, which record the transaction with the appropriate county.

Once the appropriate paperwork has been filed and monies transferred, you are a proud new landowner!

The next step…

Now, it’s time to design the perfect house plansContact us to get started and let us put you in your Element!


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How to Find and Buy Land: Step 5 - Close on the Land
Article Name
How to Find and Buy Land: Step 5 - Close on the Land
The final article in the series, "How to Find and Buy Land," which discusses the requirements to close on land, including a legal description, appraisal, and land title.
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Elements Design Build L.L.C.
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