Everything you need to know about buying land
Published on November 15, 2023
Whether you want to build a house or a cottage, invest in property or have a woodlot, buying land is an interesting option. But before you buy a lot, it’s important to check several aspects and carefully evaluate its potential.
Here’s what you need to know to buy land while avoiding unpleasant surprises.
Summary:
Why buy land?
There are several reasons to buy land, whether for immediate or future use. These can include:
- Building a house or cottage
- Installing a mobile home
- Subdividing it into smaller lots to sell
- Having it appreciate in value over time
- Using it as a woodlot
- Using it as a hunting ground
5 things to check before buying a parcel of land
Before submitting a promise to purchase a piece of land, it’s important to conduct the necessary checks, so you have all the facts to make an informed decision and so you’re sure it has the qualities you’re looking for.
1. Assess the location, surface area and topography
Is the land in a good geographical location, easily accessible, sufficiently big and close to services? These are a few questions to ask yourself before taking a serious interest in a lot. The asking price is also a factor, of course.
It’s important to know the configuration of the land, its topography, the soil composition, the vegetation and whether it is possible to dig a well and install a septic system, if applicable. The photos and the certificate of localisation will give you that information, but nothing beats an in-person visit and more extensive checks.
It is also important to know the lot’s zoning and what it allows. Some lots are not zoned for a residence, and others cannot be split up. The municipality has this information if the seller does not provide it.
2. Determine the property limits
The certificate of localisation and the cadastral plan indicate the exact property limits and any encroachments, if applicable. Sometimes the dimensions are irregular, especially when a body of water, like a lake, borders the lot. If the lot is not located along a road, a right of way is needed to access it.
3. Know the local restrictions
Building bylaws allow the municipality to control the quality, durability and safety of a structure by regulating the nature of the materials that can be used and how they are assembled.
Zoning bylaws, on the other hand, let the municipality divide the territory into zones, to control the use of the land and buildings, as well as the location, shape and appearance of the structures. The local restrictions applicable to the lot will dictate what you can and cannot do with the property.
4. Check if electrical connection is possible
You should know that remote areas far from major cities do not all have access to Hydro-Québec’s services. A request can be submitted to connect an electrical installation to a power distribution network, but it must be filed by a master electrician acting as the duly authorized representative of the property owner.
Also, don’t expect the work to be done overnight: electrical connection can take time. If it requires extending the network, it can take 12 to 18 months and will cost you a fee.
Due to the high volume of requests Hydro-Québec is receiving, it may take longer than usual to process the request or do the work. For certain requests, Hydro-Québec cannot promise a date by which the work will be completed, so you will have to arm yourself with patience.
5. Review the important documents
The first document that should be consulted is the municipality’s master plan. It defines the bylaws that apply to construction on a municipality’s territory and the exact size of the plot. It also lets you know if the land can be built on and if it can accommodate a house. The Plan de protection du territoire face aux inondations (flood zone map) indicates if the land is located in an area prone to flooding.
The certificate of localisation, which is produced by a land surveyor and provided by the seller, indicates the current condition of a piece of land in relation to the titles, encroachments and laws and regulations that may apply to it. It also indicates the easements, flood zones, at-risk areas, or municipal restrictions preventing e.g. the installation of a swimming pool or garden shed.
It is also important to determine whether the municipality in question has a site planning and architectural integration plan (PIIA), which dictates the architectural and decorative standards to respect in new builds.
The costs involved in buying land
Here are the expenses to expect when buying land in Quebec:
- Contamination, bearing capacity, percolation and water table depth tests (if they have not already been done by the seller)
- Notary fees
- The down payment
- The real property transfer tax (welcome tax)
- Sales taxes (if applicable)
- The cost to clear the land of trees (if applicable)
- Electrical connection fee(s) (if applicable)
Minimum down payment required to buy land
The minimum down payment to purchase a vacant lot is 20%. However, if a residence is built on it and completed within 12 months of the transaction, it is possible to put a down payment of only 5% of the total cost of the project.
Where to get the down payment to buy a lot
Several financial institutions (Desjardins, National Bank, Royal Bank and First National) give loans to buy land, whether serviced or not, provided that the buyer is able to show that they are solvent. You can also get a mortgage loan to build a residence on the lot. Some lenders consider acquiring land and holding it for future development a commercial venture, requiring a commercial mortgage, especially if it is a large amount.
Calculate your mortgage payments
How to finance the purchase
When someone wants to acquire land, the financial institution will ask what they plan to do with it. Do they intend to build a residence on it right away or wait? Their answer will determine the financing options available to them.
The different types of financing available: mortgages, construction loans, personal loans, personal lines of credit, homeowner lines of credit (HLC), collateral warranties and financing by the seller.
When is the best time to buy land?
Although the real estate market is usually most active in the spring, there is no right or wrong time to invest in land. It is very unlikely that it will lose value over time, unless there is a major change in the immediate area, such as a polluting business or factory being built nearby.
Putting in an offer to buy land
As when buying a house or other, an offer to purchase for a vacant lot is made in writing. The seller is free to respond to the offer by accepting it, refusing it or making a counteroffer. If the promise to purchase is accepted, it becomes an irrevocable contract, meaning that if the terms are not met, legal action can be taken. You can have a notary draft it if you like.
Building on a piece of land
There are many steps involved in building a new home. First, the buyer has to find a lot that suits their needs. Then, they have to conduct several soil analyses to determine if the land is suitable for a new building. If so, the buyer has to have plans drawn up, do excavation work to pour the foundation and have the utilities hooked up. The structural work comes next, followed by installing the electrical wiring and plumbing, as well as finishing the interior and exterior. Finally, there is the landscaping.
Whether you own a vacant lot or want to tear down a structure and rebuild, RenoAssistance's Renovation Advisors can put you in touch with Verified Contractors who can help you build the home of your dreams.
Finding the best lot in your part of Quebec
In just seconds, browse a wide selection of lots for sale thanks to DuProprio’s lot search function. There are parcels for every taste! And here’s what you need to know to sell a piece of land.
Did you know? On the DuProprio website, you can search for properties to rent as well as to buy! If you need to sell before buying or renting, our professional team can give you the visibility and support you need for a successful real estate transaction. To discover all of our services, watch our webinar or schedule a call with one of our advisors.
