The importance of a soil test when buying land or development sites | Rob Balanda

Now that the property market is gaining momentum, investors are unveiling opportunities that have been there all that time but couldn’t be acted on because of the state of the market. 

A classic example was an investor, let’s call him Paul, who found a vacant block of land in a sleepy little hollow which was now prime for development.

The block of land was one of the original blocks in the subdivision and the last vacant block, although the subdivision was created more than thirty years ago.

One of the neighbours bought the block to protect their view and now as time had rolled on, the neighbour too had passed on and the block of land was for sale by the deceased estate.

Houses filled the neighbourhood, except for this one vacant block.

Why conduct a soil test?

The question that Paul had for me was whether he needed to waste his money on a soil test for the block, given the existing houses around it.

I pressed him about the issue and the importance of always making a contract for a vacant block of land, regardless of the circumstances, subject to a soil test.

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He accepted my advice and all was revealed when the soil test showed that this block was the one where the developer, thirty years ago, dumped all of the rubble and debris from the site.

To build on this block now, all of the soil underneath the house pad would have to be removed, re-filled with quality soil and compacted and certified by a Soil Certifier.

It was a challenge to persuade Paul to make the contract subject to a soil test as the agent pushed back by pointing to the existing homes and a claim that as the developer had already submitted a soil test in order to obtain the subdivision approval years ago, all must be good.

We obtained a copy of that soil test and, as expected, it showed that the developer’s soil tester only took a few samples of the soil and most of the tests were in the area where the road was to be located.

Only one soil test was taken from each of the residential blocks, which of course is completely inadequate to determine whether the soil was satisfactory for a housing slab.

So don’t let the real estate agent sway you with their dogged defence of their position that “less is yes”, and their mantra every clause that you add to a Contract for Sale reduces your chance of getting the seller to say “yes” to your offer to buy the property.  Let’s get the truth on the table here.

The property investment world is a dangerous place.

It always has been, and always will be.

Your best protection however is education and knowing when to discerningly use clauses so that you don’t fall into a bear trap.



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Rob Balanda

About

Rob is a partner in the Gold Coast based law firm MBA Lawyers. He is a highly regarded educator of property investors and estate agents and the author of the "Made Simple" series of books and CD's.
Visit www.ClausesMadeSimple.com


'The importance of a soil test when buying land or development sites | Rob Balanda' have 1 comment

  1. November 6, 2014 @ 7:02 am Hamish

    Having had to spend maybe $10k about 20 years ago to put concrete piers in due to fill this is true. The total project was about $250k so $10k extra was a fair chunk.

    Reply


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