Two Ways to Buy
Purchase Outright
With Purchasing Outright, as soon as the closing day comes, the full balance is paid, the deed is transferred into your name and the land is yours. Although far simpler than buying a home, procedurally, this is similar to a regular real estate transaction.
There are 5 Steps in this transaction.
STEP: 1 NEGOTIATION – In terms of price, we feel we list our properties fairly at the outset, and this eliminates the needless back and forth “bartering” you find with many real estate transactions. We understand everyone likes the feeling of getting a deal, but we don’t list properties with an intentionally inflated price with the expectation of dropping a few thousand to make you feel like you won. Transparency and forthrightness is better for everyone, so, for this step we only need to negotiate a closing date, which is the date you pay the final amount and take legal possession of the land. We try to set closing dates within 4 weeks of signing, so it’s good to have access to the funds within that time frame.
STEP 2: AGREEMENT OF PURCHASE AND SALE – In a typical real estate transaction using agents, the buyer’s agent sends an offer to the seller’s agent. Then there is often a counter offer, and the back-and-forth ensues. We’ve made it simple - we know the price, we know the closing date, and we know the terms we’re willing to accept, so WE send YOU the offer, and that’s the Agreement of Purchase and Sale. For step 2, you review this document (with your own lawyer if you choose, but it’s rather simple and straightforward), and then if satisfied, you sign it and return it to us. We now have a legally binding agreement.
STEP: 3 DEPOSIT – With a legal agreement in place, you now have 48-hrs to send a $500 deposit (bank draft or certified cheque) to our lawyer in Fredericton “in trust”. If sending by mail, it likely won’t arrive in 48-hrs, so we simply require proof it was sent – a picture of the draft with an envelope addressed to our lawyer will do. The non-refundable deposit comes off the final price. We understand this step is a bit of a headache, but it’s necessary to separate ‘tire-kickers’ from serious buyers. If the deposit conditions are not met, the agreement is nullified and we immediately re-list the property, or contact the next buyer in line - we do not extend the deposit deadline for any reason.
STEP 4: TITLE SEARCH – The lawyer (whether yours, or you use ours) will now conduct the title search. This is at buyer’s expense (standard practice), and is paid at closing with the rest of the legal fees. Legal fees and other closing costs vary but they are GENERALLY about $1100 with our lawyer. Using our lawyer doesn’t save anyone money, but it does save some time, and his team is good at what they do.
STEP 5 CLOSING – With the deposit received and title search coming back clear, all seller and buyer conditions have been met and now we simply wait for the closing date. You must ensure the funds are in the lawyer’s hands on or before the closing date. On closing, the deed is transferred to your name. Congratulations, Landowner!
Rent-to-Own
With a Rent-to-Own contract, you lease the land and pay “rent” each month for a set term, usually 12, 24, 36, or 48 months. You can use the land throughout the term, and when it’s complete, the full purchase price will be paid. The deed is then transferred to you and you become the legal owner of the land. For terms greater than 12 months, there is a 10% Rent to Own fee added to the list price. Regardless of the term length, if the land is paid off within 12 months, the 10% fee is refunded.
There are 6 Steps in this transaction:
STEP 1: TERM LENGTH & START DATE - You choose a term length (available term lengths vary by property) and we agree on a Start Date for the lease. The Start Date is when the down payment is due, and the date you can start using the land. The Start Date must be within 10 days of signing the documents in Step 2.
STEP 2: CONTRACTING - You must first email a picture of your photo ID with your current address. We then send you the Lease Agreement and the Rent-to-Own contract, which you review, sign, and return to us. You can have a lawyer review the documents if you wish, but in that time the land remains for sale and it may be sold to another buyer. To minimize delays at this stage we recommend you first download and review the blank versions of our contracts below.
STEP 3: DEPOSIT - Within 12 hours of signing the agreement, you must e-transfer a $500 deposit, which comes off the down payment amount. Once the deposit is received the land cannot be sold to another buyer. We understand some people’s reluctance to send e-transfers, but you’ll have to overcome that if you want to work with us. For everyone’s protection, no money changes hands without a legal agreement in place, which happens in Step 2.
STEP 4: DOWN PAYMENT - On or before the “Start Date”, you send the remainder of the down payment (after subtracting the deposit) via e-transfer. Once received in full, the land is now available for you to use and enjoy. If you miss the deadline for the down payment, our agreement is void and the land goes back up for sale immediately. The first 4 steps can all be completed within hours, and land is sold to the first buyer to sign the documents and provide the deposit.
STEP 5: PROPERTY TAXES - From the Start Date onward, you are responsible for property taxes each year that the lease is in effect. Because the land stays in LUDC’s name until end of the term, the tax bill comes to us. We will inform you of the amount owing in March of each year, and you will have 60 days to e-transfer the amount. We will send you proof of payment once complete.
STEP 6: CLOSING - At least 30 days prior to your last payment, lawyers will be contacted to finalize the deal and transfer the deed to your name. Although LUDC will have already conducted a title search on the property, your lawyer will require another title search as part of closing. You will be responsible for the cost of this title search, as well as other legal fees, such as land transfer tax.. These vary by lawyer, but will be in the realm of $800-$1500. Congratulations, Landowner!
Download and review our documents:
As part of our commitment to transparency and in our effort to make purchasing land accessible to everyone, we’re happy to provide you (or your lawyer) with blank versions of our contracting documents. When you’re ready to buy, whether purchasing outright or via Rent-to-Own, you will receive the exact same documents, but containing all of the relevant details for your land purchase.
LAWYERS: Purchasing land in NB requires a lawyer. If you do not have a real estate lawyer, our lawyer in Fredericton can represent both parties. How common is this? Our lawyer represents both parties in about 40% of our transactions. When purchasing outright, lawyers are required up front. For rent-to-own, lawyers are not required until the end of the rent-to-own term.
REALTORS: When buying from LUDC, you are engaging in a private sale. This means we are not represented by a realtor. You may use a realtor if you wish, but they will be dealing with LUDC, and any realtor fees will be incurred by you, the buyer.