What are the challenges associated with ground disturbances?

When a developer acquires land for their project, they may find that the property has existing land disturbances that cannot be overcome. These land disturbances may come in the form of a utility easement, an easement for access to a highway, a wetland that cannot be filled, or a surface mining permit that cannot be removed. While these are all potential risks associated with purchasing a site, in some cases the owner may decide to sell the property based on the presence of these existing issues. However, if the developer wants the purchase and sale agreement to close quickly and for the seller to relinquish the existing easement or surface mining permit, they will need to negotiate specific terms as these issues are non-negotiable and cannot be overcome by legal counsel. In these cases, the developer may find themselves in a tight spot if they cannot come up with a creative solution to close the transaction. The following are some challenges associated with negotiating the purchase and sale agreement if the developer finds that the property has existing land disturbances that cannot be overcome. Read on to learn more about what these obstacles could mean if you find yourself in this situation and what you can do about it…

What is a land disturbance?

A land disturbance is a change in the land’s surface, such as construction, mining, grading, filling, or an easement. The land that exists before the change is known as the “servient estate,” while the land where the change has occurred is called the “dominant estate.” There are two types of easements: an easement in gross and an easement appurtenant. An easement in gross is a grant of rights to one piece of property for the exclusive use of another property. An easement appurtenant is a right that is attached to another property, giving the easement holder use of the property.

Utility easement

A utility easement is a right of access granted by a utility company to maintain their infrastructure, such as a power line, on an easement of land. The easement holder owns the easement while the landowner owns the servient estate. A utility easement cannot be overcome. If the developer finds that the site has a utility easement and the seller will not agree to remove the utility infrastructure, the developer may be forced to abandon the project and look for another site. There are a few ways to overcome this challenge. You could negotiate to buy a fee simple estate in the land where the easement exists, meaning that you would own the entire property. You could also negotiate for an easement in gross that does not include the existing easement. However, these options are typically not available in the real estate industry. If you cannot find an alternative solution, you could always terminate the purchase and sale agreement and terminate the contract.

Wetland easement

If a property has a wetland easement, it means that the land is subject to certain restrictions on how it can be used. Typically, wetlands are a natural buffer that protects other properties from stormwater runoff. A developer may want to purchase a property with a wetland easement in order to build on the land. However, sellers may not be willing to remove the easement. If the developer cannot overcome the easement, the developer may not be able to close escrow on the purchase and sale agreement. There are a few ways to overcome this challenge. You could negotiate to buy a fee simple estate in the land where the easement exists, meaning that you would own the entire property. You could also negotiate for an easement in gross that does not include the existing easement. However, these options are typically not available in the real estate industry. If you cannot find an alternative solution, you could always terminate the purchase and sale agreement and terminate the contract.

Easement for access to a highway

If a property has an easement for access to a highway, a developer may want to purchase the property so they can construct a road to access their property. However, sellers may not be willing to remove the easement. If the developer cannot overcome the easement, the developer may not be able to close escrow on the purchase and sale agreement. There are a few ways to overcome this challenge. You could negotiate to buy a fee simple estate in the land where the easement exists, meaning that you would own the entire property. You could also negotiate for an easement in gross that does not include the existing easement. However, these options are typically not available in the real estate industry. If you cannot find an alternative solution, you could always terminate the purchase and sale agreement and terminate the contract.

Surface mining permit

If a property has a surface mining permit, the property cannot be developed. If the developer wants to purchase the property, they may need to remove the permit. However, sellers may not be willing to remove the permit. If the developer cannot overcome the permit, the developer may not be able to close escrow on the purchase and sale agreement. There are a few ways to overcome this challenge. You could negotiate to buy a fee simple estate in the land where the permit exists, meaning that you would own the entire property. You could also negotiate for an easement in gross that does not include the existing permit. However, these options are typically not available in the real estate industry. If you cannot find an alternative solution, you could always terminate the purchase and sale agreement and terminate the contract.

What else can be negotiated?

Besides the above-mentioned challenges, there are other potential issues that can arise in the purchase and sale agreement negotiations. For example, a developer may want to negotiate for a higher purchase price, a longer escrow period, a higher down payment, or a higher interest rate. The price of the property, the time it will take to close escrow, and the amount of money required for the down payment are all important factors that can affect the overall cost of the purchase and sale agreement. The length of the escrow period refers to the time it will take to complete the transaction. A higher interest rate generally means that the seller will receive more money for the transaction. However, if the developer cannot obtain a higher interest rate, they may be forced to offer a lower purchase price or an escrow amount that is insufficient to cover expenses.

Conclusion

A purchase and sale agreement is a binding legal contract. It outlines the obligations of each party and the details of the transaction, including the price and the escrow period. If the developer finds that the property has an easement or mining permit that cannot be overcome, they may not be able to close escrow on the purchase and sale agreement. However, there are a few ways to overcome these challenges. You could negotiate to buy a fee simple estate in the land where the easement exists, meaning that you would own the entire property. You could also negotiate for an easement in gross that does not include the existing easement. However, these options are typically not available in the real estate industry. If you cannot find an