Buying raw land in Arizona can be a smart investment, but it requires careful planning. This guide breaks down the 7 key steps to help you navigate the process:
- Check Zoning and Land Use Rules: Understand local zoning laws to ensure your plans align with property regulations.
- Verify Water Rights: Water access is critical in Arizona’s dry climate. Confirm water rights and check for Active Management Areas (AMAs).
- Ensure Access and Utilities: Verify legal access to the property and explore utility options, whether on-grid or off-grid.
- Complete Property Research: Conduct title searches, land surveys, and assess physical conditions like soil and flood risks.
- Review Financing Options: Explore land loan types and down payment requirements. Consider protections like title insurance.
- Create a Purchase Agreement: Draft a contract with clear terms, contingencies, and legal protections.
- Finalize the Purchase: Complete closing steps, organize key documents, and meet any post-purchase requirements.
Quick Tip: Arizona’s land market is competitive, with raw land prices averaging $4,200 per acre statewide. Thorough research and professional guidance can save you time and money.
How to Buy Arizona Land 7 Things to Watch Out For!
Step 1: Check Zoning and Land Use Rules
Zoning regulations are the backbone of determining what you can and cannot do with your property in Arizona. These rules vary widely depending on the region and municipality, so understanding them is a crucial first step.
Find Local Zoning Information
The easiest way to get zoning details is through your county’s online parcel search. If that option isn’t available, you’ll need to contact the Planning and Zoning Department directly. Keep in mind: If you can’t obtain a parcel number, that’s a warning sign something might be off.
Here’s how to access zoning details:
- Go to your County Assessor’s website.
- Look for an "online parcel search" or "Assessor parcel search" tool.
- Enter your parcel number to pull up property information.
"Zoning is the principal tool by which the city of Phoenix implements the goals and future development plans expressed in the General Plan." – City of Phoenix
Arizona zoning classifications typically fall into these categories:
| Zone Type | Typical Uses | Key Considerations |
|---|---|---|
| Residential | Single/multi-family homes | Density limits, setback requirements |
| Commercial | Business operations | Traffic flow, parking accommodations |
| Agricultural | Farming, ranching | Lot size minimums, water rights |
| Industrial | Factories, warehouses | Environmental compliance |
| Special District | Mixed-use communities | Tailored development standards |
If the zoning rules don’t align with your project plans, you’ll need to look into rezoning options.
Check Rezoning Options
When zoning doesn’t match your vision, you have two main paths forward:
Variance Request: A variance allows you to request an exception to specific zoning rules. You’ll need to submit a detailed application, property surveys, architectural plans, and evidence of hardship.
Rezoning Application: This is a more involved process, typically taking between 3.5 and 6 months. It includes public hearings, community feedback, and impact studies.
"A variance is a request for special permission from a local zoning authority to deviate from a development standard required by a zoning law or ordinance." – Provident Lawyers
Both processes are guided by the Arizona Zoning Enabling Act (A.R.S. 9-462), which sets the legal framework. However, the specific requirements can vary significantly between cities like Phoenix, Tucson, and Flagstaff due to differences in population density, historical development, and environmental factors. Always double-check local requirements before making any final decisions about purchasing or developing land.
Step 2: Check Water Rights
In Arizona’s dry and challenging climate, securing water rights is a crucial part of buying raw land. Water laws in the state are managed by the Arizona Department of Water Resources (ADWR), so understanding their guidelines is essential.
Review Water Sources
Arizona relies on three primary water sources: surface water, groundwater, and reclaimed water. To verify the water rights for a property, follow these steps:
- Contact ADWR to confirm existing water rights.
- Check for registered wells on the property.
- Review historical water usage records to understand past consumption.
- Verify any surface water claims associated with the land.
"Areas with heavy reliance on mined groundwater were identified and designated as Active Management Areas (AMAs)."
– Arizona Department of Water Resources
Additionally, it’s important to determine if the property is located within an Active Management Area (AMA), as this will impact water usage and regulations.
Check Active Management Areas
After identifying the available water sources, the next step is to confirm whether the property lies within one of Arizona’s six Active Management Areas: Phoenix, Pinal, Prescott, Tucson, Santa Cruz, and Douglas. These areas are subject to stricter water management policies aimed at achieving safe-yield by 2025, meaning groundwater withdrawals should not exceed annual replenishment. For example, the Phoenix AMA is projected to face a groundwater shortfall of 4.86 million acre-feet over the next 100 years.
If your property is within an AMA, here’s what to consider:
- New subdivisions must prove a 100-year assured water supply.
- Well drilling requires special permits and must follow stricter rules.
- Conservation programs are mandatory for water users.
For properties outside AMAs, regulations are less restrictive, but you’ll still need to notify ADWR before drilling wells or using water sources.
"Wells drilled in AMAs are subject to stricter regulations."
– Arizona Department of Water Resources
Step 3: Verify Access and Utilities
Once you’ve confirmed zoning and water rights, the next step is to ensure legal access and utility connections for your raw land in Arizona. These elements are critical – they directly impact both the land’s usability and its value.
Check Property Access Rights
Start by confirming both recorded and physical access to the property. Look into the title report for any recorded easements, check the property itself for visible access points, and verify documented rights with the county recorder or tax assessor’s office.
"Prospective and current property owners should scrutinize title reports, which detail recorded easements. This initial step is crucial in understanding any pre-existing rights that may affect the property." – Gottlieb Law
If the land is landlocked, you might need to secure an easement by necessity. For instance, Gottlieb Law handled a case in March 2023 involving a vague easement agreement dating back to 1978. Resolving the issue not only clarified access but also boosted the property’s value by approximately $150,000.
Review Utility Options
When it comes to utilities, you’ll need to decide whether to connect to the grid or go off-grid. Here’s a quick breakdown of options and costs:
| Utility Type | Grid Connection Cost | Off-Grid Alternative | Estimated Cost |
|---|---|---|---|
| Electricity | $25–$50 per foot | Solar system (4–10 panels) | $400–$3,000 |
| Water | Varies by municipality | Well or cistern system | Contact local provider |
| Sewage | Varies by location | Septic system | Based on soil evaluation |
Electricity: Grid connections typically run $25–$50 per linear foot, but solar systems or generators can be excellent off-grid alternatives. Inverter generators, while quieter, tend to come at a higher price.
"Properties with utilities already added to them are drastically more expensive and you save a ton by adding them yourself or with a contractor. You can also customize the off-grid water, power, and septic to your specific needs when you add them yourself." – United Land Co.
Before making any decisions, get in touch with local utility companies and your county’s planning department to understand the available options and any specific requirements. For example, in Mohave County, you might be allowed short-term camping on your land even without permanent utility connections, though there are certain restrictions.
Make sure all access and utility details are confirmed before moving forward with your property plans.
Step 4: Complete Property Research
Once you’ve confirmed access and utilities, it’s time to dive deeper into your property research. This involves verifying clear title records and evaluating the land’s physical conditions.
Get Title Search and Survey
A title search is a must to confirm ownership and uncover any potential issues like liens or claims. This process involves reviewing public records, which can reveal critical details:
| Record Type | Details Revealed | Significance |
|---|---|---|
| Ownership Records | Warranty deeds, quitclaim deeds | Confirms the legal chain of ownership |
| Financial Records | Mortgages, liens, foreclosures | Highlights financial obligations |
| Property Information | Tax records, plat maps, assessments | Provides property history and current status |
Skipping this step can lead to costly legal and financial disputes down the road.
Here’s a breakdown of title search costs in Arizona, which vary depending on the scope and county:
- Basic O&E (Ownership & Encumbrance) Report: $87.95
- Two Owner Search: $137.95
- Comprehensive 30-Year Search: $175.00
Additionally, a land survey is essential to understand property boundaries and terrain. Expect to pay between $376 and $745, depending on the size and complexity of the land.
Check Land Conditions
Understanding your land’s physical characteristics is just as crucial, especially if you plan to develop it. In the Phoenix area, soil types vary and can influence construction and landscaping:
- Desert loam (40%): Great for native landscaping.
- Urbanized soils (30%): May need remediation.
- Caliche (15%): Can complicate construction.
- Gravelly desert soils (10%): Excellent for drainage.
- Alkali soils (5%): Require special handling.
To ensure safe development, consider these key assessments:
- Use the FEMA Flood Map Service Center to check for flood risks (6% of Arizona land is prone to flooding).
- Conduct a soil analysis, which typically costs between $20 and $150.
- Evaluate the overall property condition.
For expert advice, consult local professionals like ESI in Phoenix, who can provide insights on how heat and monsoon seasons might impact your property.
"Properties with utilities already added to them are drastically more expensive, and you save a ton by adding them yourself or with a contractor. You can also customize the off-grid water, power, and septic to your specific needs when you add them yourself." – United Land Co.
Step 5: Review Financing Options
When it comes to financing raw land, the process is a bit different from securing a traditional mortgage. Land loans often require a larger down payment and a stronger credit history, so understanding your options is key.
Choose Loan Type
The type of land you want to purchase plays a big role in determining your financing options. Here’s a breakdown of common land loan types and their requirements:
| Loan Type | Down Payment Minimum | Key Requirements |
|---|---|---|
| Raw Land | 35% | Minimum credit score of 700 |
| Unimproved Land | 25% | Debt-to-income ratio of 43% or lower |
| Improved Land | 15% | Verified access to utilities |
Different lenders offer various structures for land loans. For example, America First Credit Union provides options such as:
- 10-year fully amortizing loans
- 20-year amortization with a 5-year balloon
- 30-year amortization with a 5-year balloon
If you’re considering rural land and plan to build on it, USDA loans might be worth exploring. They often come with lower down payments and more flexible credit requirements. Similarly, Global Credit Union offers competitive loan-to-value (LTV) ratios, such as 75% LTV for residential lots and 70% for recreational properties.
Once you’ve identified the loan type that fits your needs, it’s essential to protect your investment with the right safeguards.
Add Purchase Protections
Including protections in your financing agreement can help safeguard your investment. Here are some key measures to consider:
- Title Insurance Protection
Before closing, secure comprehensive title insurance. This coverage shields you from issues like ownership disputes, boundary conflicts, or outstanding liens. - Contract Contingencies
Work with a real estate attorney to add important contingencies to your agreement. These might include inspection periods, title reviews, environmental assessments, zoning verification, and access confirmation. - Payment Protection
If you’re opting for seller financing, ensure your agreement includes clear payment terms, a grace period, default remedies, and conditions for title transfer.
With land in Arizona averaging around $4,328.23 per acre, choosing the right financing options and adding these protections can make a significant difference in the success of your investment.
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Step 6: Create Purchase Agreement
Drafting a solid purchase agreement is a crucial step in protecting your investment and ensuring everything is legally sound. Building on the groundwork laid during your due diligence, this document serves as the final piece in establishing the legal framework for your investment.
Key Protections to Include
Your purchase agreement should clearly spell out the critical details of the transaction. Below are the essential elements to include:
| Contract Element | Required Details | Purpose |
|---|---|---|
| Property Description | Legal description, parcel number, boundaries | Accurately identifies the property |
| Purchase Terms | Price, payment schedule, deposit amount | Defines financial responsibilities |
| Due Diligence Period | Timeline for inspections, surveys, title search | Allows thorough property review |
| Contingencies | Financing, zoning, water rights, access | Provides exit options if issues arise |
| Closing Timeline | Escrow details, closing date, possession terms | Establishes the transaction timeline |
Make sure to include specific contingencies with clear deadlines. For example, you might require water rights verification within 30 days of contract acceptance.
To ensure these protections are properly outlined, it’s wise to seek professional advice from local experts.
Consult Local Professionals
Hiring experienced local professionals is essential to ensure your purchase agreement complies with Arizona’s specific legal requirements. Here’s who you should consider:
- Real Estate Attorney
- Review and tailor the contract to Arizona laws
- Draft contingency clauses
- Verify water rights and other key documentation
- Title Company
- Conduct thorough title searches
- Manage escrow services
- Provide title insurance
- Local Real Estate Broker
- Offer insights into the market
- Connect you with reliable professionals
- Guide you through state-specific requirements
In Arizona, all agreements must be in writing to be legally enforceable, as required by the Statute of Frauds. Contracts provided by the Arizona Association of REALTORS® (AAR) are designed to meet state standards and can also serve as escrow instructions.
Before finalizing your agreement, ensure that property boundaries are clearly marked by licensed surveyors and recorded with the county recorder’s office. This step not only prevents future disputes but also ensures a smooth title transfer process.
Step 7: Complete Purchase and Follow-up
Once the terms of your purchase agreement are finalized, it’s time to wrap up the final steps to secure your raw land in Arizona.
Finish Closing Steps
The closing process typically takes 2–4 days leading up to the scheduled escrow date. Here’s a breakdown of what happens during this important phase:
| Timeline | Action Required | Responsible Party |
|---|---|---|
| 3–4 days before | Review loan and closing instructions | Title Co. |
| 2–3 days before | Sign loan documents and provide funds | Buyer |
| 1–2 days before | Final walkthrough of property | Buyer |
| Closing day | Record deed with county | Title Co. |
| Post-recording | Collect keys and final confirmation | Buyer |
In Arizona, buyers and sellers generally sign documents in separate appointments rather than participating in a joint "sit-down" closing. The deal is officially complete only when the deed is recorded with the county.
To ensure everything goes smoothly:
- Be available 2–3 days before closing to sign documents.
- Plan your move for at least one day after the closing date.
- Carefully review all documents before signing.
Once the closing is finalized, make sure to organize all relevant documents and confirm that you’ve met any local requirements to complete your investment.
Complete Required Paperwork
After closing, there are a few important tasks to tackle to finalize your ownership and prepare for next steps:
- Organize Essential Documents
Keep copies of key paperwork, including:- Recorded general warranty deed
- Title insurance policy
- Property survey maps
- Water rights conveyance forms (if applicable)
- HOA documentation (if relevant)
- Meet Regulatory Requirements
Check these items off your post-purchase checklist:- Confirm zoning compliance
- Apply for necessary building permits
- Complete water rights transfers
- Register the property with tax authorities
- Set Up Utilities
Reach out to utility providers as soon as possible to:- Open new service accounts
- Schedule installations and inspections
- Arrange billing details
Keep in mind that the Arizona Department of Real Estate mandates a Public Report for subdivisions with six or more parcels. Be sure to store this report with your property records for future use.
Conclusion: Smart Land Buying in Arizona
Buying raw land in Arizona can be a rewarding investment, but it demands careful planning and research. With its endless sunshine and a steadily growing population, Arizona offers plenty of opportunities for investors and future homeowners alike.
The state’s relatively low property tax rate of 0.63% makes land ownership more attainable, especially when paired with the right preparation and expert advice. Just last fiscal year, over 57,000 acres of trust land were leased or sold in Arizona, showcasing the dynamic nature of the land market.
When assessing land for purchase, remember that development costs can vary widely depending on the location and available infrastructure. Here are three key aspects to prioritize:
- Secure Water Rights: In Arizona’s dry climate, understanding and securing water rights is essential for determining the land’s long-term value and usability.
- Seek Professional Guidance: Work with professionals who are well-versed in zoning regulations and land-use laws to avoid costly mistakes.
- Conduct Environmental Reviews: Comprehensive assessments can help you identify any restrictions or potential mitigation requirements, protecting your investment.
FAQs
What challenges might arise when securing water rights for raw land in Arizona, and how can they be resolved?
Securing Water Rights for Raw Land in Arizona
Navigating water rights for raw land in Arizona can be tricky, thanks to the state’s arid climate and strict water regulations. Limited water availability, persistent drought conditions, and the legal distinctions between groundwater and surface water rights add layers of complexity. On top of that, water laws can vary depending on the region, so understanding the specific rules for the property you’re eyeing is absolutely crucial.
The first step? Do your homework. Conducting thorough due diligence is essential. Work with a legal expert who knows Arizona’s water laws inside and out. They can help you assess any existing water rights tied to the property. Additionally, programs like the Assured and Adequate Water Supply programs are designed to verify long-term water availability in certain areas. These resources can give you confidence that your investment won’t run dry – literally.
By taking these proactive measures, you’ll be better prepared to sidestep potential issues and make a well-informed decision when buying raw land in Arizona.
How do zoning regulations in Arizona impact my plans for developing raw land, and what can I do if the zoning doesn’t fit my project?
Zoning Regulations in Arizona
Zoning regulations in Arizona are crucial in deciding how raw land can be utilized. These rules dictate whether a property can be used for residential, commercial, or agricultural purposes and often include restrictions on building size, height, and density. The goal of these regulations is to ensure that developments align with the character of the surrounding area and meet the needs of the community.
If your plans for the land don’t align with its current zoning, you have the option to apply for a rezoning. This process requires submitting a formal request to your local planning department, detailing your intended use and explaining why the change would be beneficial. Be prepared for a potentially lengthy process – it can take several months and typically involves public hearings and approval from local officials. To navigate the complexities of rezoning, consulting with a zoning expert or attorney can be a wise move.
What should I know about financing raw land in Arizona, and how is it different from getting a home loan?
Financing Raw Land in Arizona
Buying raw land in Arizona comes with its own set of hurdles, especially when it comes to financing. Unlike traditional home loans, land loans often demand a larger down payment, typically around 20% or more. On top of that, they come with higher interest rates because lenders see them as riskier investments. Why? Vacant land doesn’t generate income and can be harder to sell compared to a property with a home on it.
The approval process for land loans is also more demanding. Lenders tend to require a strong credit score and a low debt-to-income ratio. And since there’s no building on the land to serve as collateral, securing a loan can become a bit trickier. By understanding these challenges, you’ll be better equipped to navigate the process and make smart choices when buying raw land.
