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As with single family homes, one of the most important factors to consider when buying vacant land is location.
Land that is near shopping centers, schools and other community features will be higher in price but is much more likely to increase in value.
When looking at land in an undeveloped or under developed area, it's important to investigate the future of the area as well. Local land-use plans are always available at city hall or from the county. Land that is in the path of development will appreciate considerably as the infrastructure nears. Researching upcoming development can alert you to any potentially objectionable future neighbors such as refuse transfer stations, major highways or noisy industrial parks.
The proximity of the land for sale to developed areas can affect building costs, as some contractors will charge extra for jobs on remote work sites.
Things to consider
Zoning is the single most important consideration when looking to purchase vacant land. Simply put, how a parcel of land is zoned will determine what, if anything, you will be able to build there in the future.
Zoning regulations are often complex and highly specific, even in rural areas. They may deal with matters as large in scope (such as the permissible size of home to be built on a lot) or small (the maximum slope allowed for a driveway, for instance). In almost all areas, violation of zoning rules results in hefty fines.
Zoning regulations vary greatly from area to area, so carefully study the local zoning rules that apply to any prospective land purchase.
Zoning in coastal and Wetland areas are particularly subject to state and federal guidelines that each municipality must follow. More information can be found on the states web-site.
If the land doesn't have hookups for water, sewer, electricity and/or telephone, check with the city/municipality regarding plans to extend access.
Septic tanks & wells
If sewer utilities are not available, you will need to order soil tests to see if the land can support a septic system. If water utilities aren't available, you'll need to see if a well is an option and, if so, how far down the well must be dug. Well digging can become expensive, and septic systems alone can range from $4,000 to $40,000 dollars depending the system, local labor rates and material costs.
Additional soil borings may be necessary to determine how far down builders would need to dig in order to excavate for the buildings foundation.
The grade and slope of the land will determine how much you can build and the costs you will incur. Hilly land requires careful water drainage management. Wooded areas may require extensive tree removal prior to any construction.
If the land isn't accessible by a public road, there should be a deeded right-of-way that gives you the right to access your land. You will share the costs of road construction and upkeep.
Future construction budget
Most buyers of vacant land purchase the property with the intent of building a home at a later date. When doing so, it's important to factor in realistic future construction costs to help determine the true value of the individual land deal. Some buyers may have the tendency to get caught up in the excitement over a promising piece of property and, in the process, ignore real fiscal challenges that the land itself may present.
While the mortgage industry today has focused on making it easier for homebuyers to secure financing, land loans are more difficult to secure. Most lenders view vacant land buys as riskier in comparison to purchases of existing homes.
Land loans are often referred to as "story loans", meaning that you will have to tell lenders the story behind the property and your plans for the property in the future. Getting the lender to buy into your vision is essential.
Risks for lenders
Why, are land loans considered riskier for lenders than home loans? Primarily because the loan's collateral (the property) is not in current use, making it easier for the owner to walk away. Land value can also be harder to accurately assess.
The bottom line
Because of the risks, down payments and interest rates are generally higher for land loans than they are for home loans. Using a local savings and loan or community bank whose loan officers are familiar with the area may lessen some of these increases.
Unimproved, raw land is the hardest type of land to finance because it is essentially a speculative investment. Some lenders will require a 50 percent down payment for a raw land loan, although loans with 20 percent down payments are not uncommon.
Loans for improved land (land with utilities, sewers, street access, etc.) will have a lower down payment and interest rate. Buying improved land with immediate plans for construction is the easiest way to secure a land loan because the lender will be paid off when you take out a mortgage on the structure. Land loans generally mature in 10-15 years.
Are you considering buying property near tidal water Building a home, a retail center, or marina? Are you proposing a development? Or maybe an addition to an existing structure in a coastal town? If so, here are things to consider
The Waterfront Development Law (N.J.S.A. 12:5-3)
The Waterfront Development Law is a very old law, passed in 1914, that seeks to limit problems that new development could cause for existing navigation channels, marinas, moorings, other existing uses, and the environment.
If you are proposing any development in a tidally flowed waterway anywhere in New Jersey, you need a Waterfront Development Permit. Examples of projects that need a Waterfront Development Permit include docks, piers, pilings, bulkheads, marinas, bridges, pipelines, cables, and dredging.
For development outside of the CAFRA area, the Waterfront Development Law regulates not only activities in tidal waters, but also the area adjacent to the water, extending from the mean high water line to the first paved public road, railroad or surveyable property line. At a minimum, the zone extends at least 100 feet but no more than 500 feet inland from the tidal water body. Within this zone, DEP must review construction, reconstruction, alteration, expansion or enlargement of structures, excavation, and filling. However, this part of the law does not apply within the Hackensack Meadowlands Development District.
Wetlands Act of 1970 (N.J.S.A. 13:9A)
The land immediately adjacent to a tidal water often contains coastal wetlands. These wetland areas are a vital coastal resource serving as habitat for many creatures. The wetlands also serve as buffers that protect upland areas from the flooding and damage caused by storms.
The Wetlands Act of 1970 requires the DEP to regulate development in coastal wetlands. Any time land is located near tidal water, there is a good possibility of coastal wetlands on the property. Some signs that may indicate the presence of wetlands are tall reeds and grasses, or ground that is often soggy. The regulated coastal wetlands are shown on maps prepared by the DEP. Unlike DEP's freshwater wetlands maps, the coastal wetlands maps are used to determine jurisdiction. These maps are available for public inspection at each county clerks office.
You must have a coastal wetlands permit to excavate, dredge, fill or place a structure on any coastal wetland shown on the maps.
Tidelands Act (N.J.S.A. 12:3)
Tidelands, also known as "riparian lands" are lands now or formerly flowed by the tide of a natural waterway. This includes lands that were previously flowed by the tide but have been filled and are no longer flowed by the tide. These lands are owned by the people of the State of New Jersey. You must first get permission from the State to use these lands, in the form of a tidelands license, lease or grant, and you must pay for this use. Click here for more information about tidelands.
CAFRA contains exemptions for certain minor activities such as maintenance, plantings, decks or similar structures at a residence, rebuilding a damaged structure on the same building footprint (if it was damaged after 7/19/94), and enlarging a dwelling without increasing its footprint or number of units. Contact LUR for a complete list of available exemptions.
The Waterfront Development Program exempts the repair, replacement or reconstruction of some legally existing docks, piers, bulkheads and buildings, if the structure existed before 1978 and if other conditions are met. Also, there are exemptions for certain single family homes and for small (5,000 square feet) additions to certain existing structures, if the single family home or structure is located more than 100 feet inland from the mean high water line.
The Pinelands Protection Program is a regional land-use program which protects natural resources through various planning and zoning measures. The following contains the management areas governed by the Pinelands Commission.
Preservation Area District -- 288,300 acres. This is the heart of the Pinelands environment and the most critical ecological region; a large, contiguous wilderness-like area of forest which supports diverse plant and animal communities and is home to many threatened and endangered species. No residential development, except for one-1 acre lots in designated infill areas (total 2,072 acres) and special "cultural housing" exceptions, on minimum 3.2 acre lots for property owned by families prior to 1979. Limited commercial uses in designated infill areas.
Special Agricultural Production Area – 40,300 acres. These are areas primarily used for berry agriculture and horticulture of native Pinelands plants. Only residential farm-related housing on 40 acres, and expansion of existing non-residential uses permitted.
Forest Area – 245,500 acres. Similar to the Preservation Area District in terms of ecological value; this is a largely undeveloped area which is an essential element of the Pinelands environment. It contains high quality water resources and wetlands and provides suitable habitat for many threatened and endangered species. Permitted residential densities average one home for every 28 acres.
Agricultural Production Area – 68,500 acres. These are areas of active agricultural use, generally upland field agriculture and row crops, including adjacent areas with soils suitable for expansion of agricultural operations. Farm-related housing on 10 acres and non-farm housing on 40 acres are allowed. Permitted non-residential uses are agricultural commercial and roadside retail within 300 feet of preexisting commercial uses.
Rural Development Area – 112,500 acres. This is a transitional area that balances environmental and development values between conservation and growth areas. Limited, low-density residential development and roadside retail is permitted. Residential densities average one home for every five acres.
Military and Federal Installation Area -- 46,000 acres. Federal enclaves within the Pinelands. Permitted uses are those associated with function of the installation or other public purpose uses.
Pinelands Villages -- 24,200 acres. 47 small, existing, spatially discrete settlements which are appropriate for infill residential, commercial and industrial development compatible with their existing character. Residential development is permitted on minimum 1-acre lots if not sewered.
Pinelands Towns – 21,500 acres. Six large, existing spatially discrete settlements. Residential development is permitted on minimum 1-acre lots if not sewered and 2 to 4 homes per acre with sewers. Commercial and industrial uses are also permitted.
Regional Growth Area – 77,200 acres. These are areas of existing growth and adjacent lands capable of accommodating regional growth influences while protecting the essential character and environment of the Pinelands. Residential development of approximately 3 homes per acre with sewers. Commercial and industrial uses are permitted
Freshwater Wetlands - Wetlands are commonly referred to as swamps, marshes, or bogs. Previously misunderstood as wastelands, wetlands are now being recognized for their vital ecological and socioeconomic contributions.
Stream Encroachment/Flood Plain - The state regulates work in flood plains to protect the loss of life and property during flood events. The program minimizes flood damage by ensuring that buildings are placed in safe areas, and are constructed to withstand high water.
Coastal Permitting (includes CAFRA, Waterfront Development and Coastal Wetlands) - New Jersey's coastline is a rich, diverse fabric of natural wonders that improve our quality of life and enrich our economy. Businesses, tourists, and residents are drawn to New Jersey's coast for its many economic and recreational opportunities. Hasty, uncoordinated development along the New Jersey shore has already had an impact on this fragile ecosystem.
Tidelands - Tidelands, also known as riparian lands, are all those lands now or formerly flowed by the mean high tide of a natural waterway. These lands are owned by the people of the State of New Jersey. As a result, you must get permission from the State to use these lands, in the form of a tidelands license, lease, or grant
Before a property can be developed, the owner is required by federal and state law to determine whether wetlands are present, and to identify or delineate the extent of these wetland borders.
A 3 Parameter Approach is used to identify wetlands: 1) wet conditions, 2) wet or hydric soils with mottling or gray layers, and 3) vegetation that is adapted to wet soils. The wetland delineation maps, soil data, and plant & wildlife reports are submitted to the NJDEP in a Letter of Interpretation (LOI) Application. LOI Applications can be reviewed at your town hall.
The NJDEP Land Use Regulation Program (LURP) administers the Wetland Rules and permits. NJDEP reviews the applications to determine the Wetland Resource Value Classification and to determine the widths of the required buffers areas. Buffers are officially called Transition Areas, and they extend around the wetland perimeter to ensure that the proposed development does not impact the wetland functions, such as habitat and flood control.
NJDEP has established three Wetland Classifications:
1. Exceptional wetlands include sites with the documented habitat or presence of threatened or
endangered species; or discharges to trout production waters; and requires a 150 ft transition
2. Intermediate wetlands require a 50 ft transition area buffer.
3. Ordinary wetlands include altered drainage features such as ditches, swales, and detention basins; and do not require a transition area buffer. This category also includes Isolated wetlands near developed areas.
Compensation or Mitigation for freshwater wetland disturbances normally requires providing 2 acres for each acre disturbed. This Mitigation can be provided through wetland creation, restoration, land or dollar contributions, or banking. New regulations encourage developers to provide compensation by banking, or purchasing credits at privately created Wetland
Mitigation Banks. Mitigation Banks include large wetland tracts that are created or restored, and are monitored. Unfortunately, the few available Mitigation Banks are likely to be located miles away from the disturbed site. Communities can provide input to NJDEP on mitigation decisions.
CAFRA - A Coastal Area Facility Act permit is required to construct residential, commercial, public, transportation, utility and energy-related facilities in the coastal area as defined by the Act.Federal Consistency Activity: Certain federal permits, not limited to the U.S. Army Corps of Engineers Dredge and Fill Permits, require certification by the DEP prior to the issuance of the permit by the federal agency.
Freshwater Wetlands: A Permit (Letters of Exemption, Letters of Interpretation, Statewide General Permit, Open Water Fill, Individual, Transition Area Waiver, Water Quality Certificate) is needed prior to engaging in a regulated activity in or around freshwater wetlands and associated transition areas. A Flood Hazard Area Permit, an U.S. Army Corps of Engineers Dredge and Fill Permit, and a Water Quality Certification may also be required.
General Groundwater Petroleum Products Cleanup: This general permit authorizes the surface water discharge of treated groundwater previously contaminated with petroleum products.
NJPDES permits: A permit is required for the discharge of pollutants to surface and groundwater, a discharge from an indirect user or the land application of municipal and/or industrial residuals. (A more comprehensive definition of activities, which require a permit, may be found at N.J.A.C. 7:14A-2.4)
Solid Waste Facility: A permit is required to conduct or operate any solid waste facility as defined under the Solid Waste Management Act, N.J.S.A. 13:1E-1 et seq., and N.J.A.C. 7:26-1 et seq.
Tidal Wetlands: A Coastal Wetlands Permit is needed to excavate, dredge, fill or erect structures on coastal wetlands.
Treatment Works Approval: A TWA permit is required for the construction, modification or operation of a treatment works, including sanitary/industrial sewage pretreatment or treatment systems, sewage conveyance systems, sewer extensions and subsurface sewage disposal systems.
Waterfront Development: A permit is required for any project involving the development of waterfront near or upon any tidal or navigable waterway in the State.
Coastal Wetlands: A permit authorizing disturbances to Mapped Tidal Wetlands under the Wetlands Act of 1970, N.J.S.A. 13:9A”
Q: How do I determine the status of my pending NJDEP permit application?
B: Contact Technical Services at (609) 777-0454 and inquire directly as to the status of your permit application. You will need to provide them with your Block, Lot, Township and County of the property in question.
Q: How long is my permit valid for?
A: All NJDEP permits are valid for 5 years from the issuance date. USACOE approvals have an expiration date on them.
Q: What do I do if my permit is about to or has expired?
A: Your permit may be extended under the Permit Extension Act of 2008 (S3137/A4347), until December 31, 2012. If your permit is not covered under the Permit Extension Act of 2008 then once your permit is expired it remains expired. You will then need to re-apply and begin the process again