Conditions to Put in a Land Purchase Agreement Before You Buy a Lot in Ontario

Why a general due diligence condition is not enough

A clause that says the offer is conditional on the buyer being satisfied with their investigations sounds like it covers everything. It covers whatever you think to investigate in the time you have. Naming the checks does two things: it forces you to actually do them, and it gives you a clean exit if one comes back bad. The seller’s agent will push back on a long list. A reasonable seller with a buildable lot does not mind the list; the list only scares sellers who know something.

The eight conditions

1. Zoning and permitted use. A zoning compliance letter or a planning department confirmation that a single detached dwelling of your intended size is permitted, with the setbacks, lot coverage and height limits stated. Lot zoning explains what the letter should say.
2. Building permit feasibility. Confirmation from the building department that there is no known reason a permit would be refused: no outstanding orders, no deferred development charges, no servicing capacity issue. Some departments will give a pre-consultation letter; it is worth the fee.
3. Septic and water. On an unserviced lot, a satisfactory site assessment by a septic designer or installer (soil, percolation, room for the bed and the mandatory clearances), and either a well record for the lot or neighbours’ well records showing depth and yield. Septic on a lot and well water on a lot set out what good answers look like.
4. Conservation authority and floodplain. Written confirmation from the conservation authority of whether the lot is regulated, and if so what a permit would require. Conservation authority approvals explains why this can change the building site or kill it.
5. Title, survey and easements. Your lawyer’s review of the parcel register for easements, rights-of-way, restrictive covenants, shore road allowances and anything registered against the land, with a current survey or a condition that the seller provide one. Easements are the usual surprise.
6. Soil and site. The right to do test pits or a geotechnical investigation, and the right to walk away if the findings make the foundation uneconomic. Soil conditions explains what you are looking for.
7. Access and services. Confirmation of legal year-round access (not a private or seasonal road unless you accept it knowingly), an entrance permit being obtainable, and hydro availability with a connection estimate. The entrance permit and hydro connection cost cover the two that most often surprise.
8. Financing. Vacant land financing is harder to get than a house mortgage; make the offer conditional on it. Vacant land mortgages explains why.

How long to ask for

Thirty days is tight for a rural lot; sixty is comfortable; ninety is what you want if a conservation authority is involved, because their response times are their own. If the seller will only give 30, prioritize: zoning and conservation first, septic second, title throughout, soil last. Ask for the right to extend for a stated reason.

What to do when the seller says no

Sellers refuse conditions for two reasons: they have another offer, or they know something. You cannot tell which from the outside, so treat a refusal of the zoning, conservation or septic condition as a price signal. Either the price drops to reflect the risk you are taking on, or you walk. The lots that come back on the market two years later with a failed septic test and a conservation refusal are the ones somebody bought unconditionally.

Costs of doing the checks

A zoning letter and a pre-consultation are small fees. A septic site assessment is a few hundred to a little over a thousand. A survey, if needed, more. A geotechnical report with two or three test holes is the biggest item and the most valuable. Total it up and it is a fraction of one percent of a building lot; it is the cheapest insurance on the whole project. What to look for in vacant land is the checklist for the walk-around that comes before any of this.

Related guides on this site

Sources and further reading

• Planning Act (minor variances, severances)
• Permits under the Conservation Authorities Act
• Citizen's guide to building permits

Questions people ask