Closing Procedures for Vacant Land Purchase

Making sure that all contract contingencies have been met and you're getting what you paid for when you close on your purchase of raw land.

By , Attorney Yale Law School
Updated 6/21/2024

Closing on the purchase of a parcel of land where you plan to build your new home is, in principle, straightforward: You give the seller the agreed-upon sales price and the seller gives you the land. In practice, however, the process is more complicated—though less so than when buying an existing home, since you won't need to worry about lead paint, radon, or any other issues relevant to built structures.

At the same time, when buying an existing house, the purchaser can count on the lender's expertise. With vacant land, unless you're financing the purchase with a bank loan, you might need to rely more extensively on your own preparation and diligence.

In any event, it's well to understand how your closing will work, even if you're relying on the bank's closing attorney to supervise the process. That's what we'll discuss here, including:

  • what documents you'll need to obtain and review
  • performing a final walk-through of property pre-closing
  • protecting yourself from future disputes over title concerns, and
  • what will happen at the actual closing.

Documents to Review Before or at the Land Purchase Closing

Every closing is meant to reflect the terms set forth in the purchase and sale agreement. You will want to assure yourself that you are receiving everything you bargained for and that all of the conditions and contingencies you put in the purchase and sale agreement have been met.

If you'll be obtaining bank financing, and local lending practice calls for presenting you with a loan package (including loan documents), you'll want to look at the deed and loan documents prior to the closing. You won't have nearly enough time to read and think critically about these if you're seeing them for the first time at the closing. Otherwise, review the commitment letter, loan summary, or other material that the bank will have provided at the time of the financing commitment.

Make sure all inspections have been completed and you have the resulting reports. Check to see that you have all required surveys, soils logs or septic system designs and other engineering, and confirm that all contingencies have been satisfied. For example, your agreement might be contingent on the seller's designing a septic system for the land and obtaining a permit from the local board of health for its installation.

Final Walk-Through Before the Closing

Plan to walk the land just before the closing. You want to be sure that it hasn't changed in any material way from the last time you saw it. People occasionally dump trash or old appliances on vacant land, or cut trees, or remove sand or gravel. You're entitled to take possession of land that's in the same condition as when you decided to purchase it (unless you and the seller agreed that changes would be made in the interim).

Protecting Yourself From Future Title Issues

Your bank will require that you obtain, and, typically, pay for, title insurance backing up your legal ownership of the property. Whether or not you're using bank financing, it's prudent to get this insurance in place. The most careful title search can fail to turn up easements, liens, or other encumbrances that could make the land unmarketable in the future or significantly impair its market value.

A boundary dispute with a neighbor, for example, could arise long after the closing and involve two conflicting perimeter surveys, thus requiring the intervention of a title insurer.

Virtually all title insurance is written by national title insurance firms. Review the report before the closing. If problems are indicated, for example, a mechanics' lien that nobody remembered to remove from title when a contractor's bill for installing a border fence was finally paid, you want as much time as possible to resolve them.

What Happens at the Closing

You can close your purchase of vacant land either "in person," "in escrow," or virtually, depending on the convenience of the buyer, the seller, the broker and the bank.

An in-person closing means that every party to the transaction or that person's representative appears in person, usually at the registry office at which the deed and other closing documents will be recorded. That allows you to run title down to that very moment and complete the closing on the spot: You have the confidence and the satisfaction of knowing you own what you just paid for.

An in-escrow closing usually takes place at an attorney's or bank's office, where a designated representative, for example, the bank's attorney will record the deed and distribute the checks at the end of the day or week. You're surrounded by all of the office's technological conveniences, which is handy in case you need to change documents before they're recorded.

A virtual closing is just what it sounds like. All documents are signed and approved online, except for those which require a notary's signature, meaning they'll need to check your driver's license or other form of ID to make sure it's really you. In this case, you'll need to arrange a meeting with a notary public, either in real life or via videoconferencing. You can also arrange for a "mobile notary" to come to you.

Real estate closings can seem mechanical. But careful review of the documents that will be executed at the closing, and the assurance that those documents are properly recorded, will give you the confidence that you're actually getting what you purchased and that some technical error won't deprive you of something you've worked hard to achieve.

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