How do I buy neighbor's lot to keep view?
Dear Real Estate Adviser,
My neighbor recently bought a small house on two-thirds of an acre situated between our respective homes. The truth is, I've enjoyed having this additional lot connected to my own backyard and I don't want to lose it; it's level and picturesque with nice tall pines. How would I go about trying to buy my neighbor's tract, and how should I approach the neighbor, who is only an acquaintance?
-- Walker R.
The process may be a little more complicated and expensive than you think. For starters, you should check with your municipal government to make sure what you're proposing is even possible. You won't be allowed to reduce the house's lot to a smaller size than is required by city zoning and that applies to frontage, width and setback. (I assume the house will be a rental.)
You seek a "lot-line adjustment." A similar sounding action, a "lot-split," generally serves to create two or more new lots out of an existing parcel and is more commonly done for development.
Assuming the city and the neighbor give their consent, expect to pay all related costs, as this is your idea. Among your first actions would be to hire a land surveyor. Some states such as California require a licensed surveyor to submit to the planning department an application on behalf of the property owner that includes a legal description of the property and proposed change. The planning department will tell you what is required.
That's just the start. Expect to incur additional expenses including title transfer fees, recording fees and deed modification, as well as attorney fees, because you shouldn't leave caution to chance. You'll probably need to buy title insurance, too, to make sure you've got clear title.
Making the proposal
Now, how to approach that neighbor? Well, since you two aren't tight, try to find an opportune time on one of his non-workdays to broach the subject in person, telling him you have already done some cursory research and saying you will follow up with a written proposal if he is at all interested. (Go easy at first and give him time to warm to the idea).
You might mention that while he may not have thought about selling the tract, the move would give him a quick return on his recent investment and eliminate the need to maintain the larger lot, plus reduce his property taxes. If the neighbor seems open to the idea, brief him on what you've found out thus far and mention your general thoughts about where the new lot line should be located. Ask for his input, of course.
Determining what it's worth
As for the price, realize you may have to offer about 10 percent to 20 percent more per square foot than he paid for the lot, just for his trouble. If the sale information is not in county deed records, you can look at recent comparable sales. Or you can ask the real estate agent who sold you your home to dig up the information. A pro can help you weigh such factors as how property is zoned, how or if it can be improved and what constitutes its highest and best use.
By the way, one possible issue for the neighbor, assuming he has a mortgage on this new property, would be that his lender would have to consent to any changes affecting its legal description and then agree to issue a partial release. This is getting sort of complicated, isn't it?
Then there's the matter of your financing. An agent should know which lenders are financing land loans; typically they're community banks. Because there will be no home on the land you're buying, there's less collateral to seize if you should default, so expect a higher-percentage down payment and interest rate. A home equity loan or cash-out refinancing of your current mortgage may be a cheaper option since there's less lender risk.
Still interested? If so, good luck! We all want those grand views.
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