Expert: liznarr - 12/28/2010

Question
I am a resident of Indiana. I am interested in buying 90 acres of farm ground in Washington County, just south of Greenville, MS. The agent said we could do a contract/option for 30 days. During that time I could back out of I wanted to do so at no cost to me. Is this done in MS real estate transactions? Also, would my Indiana lawyer know any differences between Indiana and MS law. Thank you. Any special advice about such a transaction?

Answer
Hi Nancy,

An Option is, simply put, a Contract, and is covered by any laws as they pertain to Contract Law.   An Option can be utilized in any real estate transaction, so long as the parties to the Option agree to its terms.  While I am not an attorney, I see no reason at all why this would not be allowed in Mississippi.  If I were you, I would have your Indiana lawyer draft the Option Contract for you to make sure you are properly protected, and I am sure your Indiana lawyer will either know or can research any differences between Indiana and Mississippi laws as they pertain to Options.  

You will also want to have all your terms and pricing agreed to in advance of the Option, as you would not want to “begin” negotiations on your purchase at the expiration of the Option period.  Your attorney will reference your negotiated price in the Option and will probably include a copy of your negotiated Contract on the property, which would be effective on your election date (the end of your 30-day Option period).

Options usually come with a price tag attached.  Hopefully, you have already discussed and agreed what price, if any, you will pay for the 30-day Option you would get.

I am assuming that you have seen the 90-acre tract of land in Washington County, and that you either have, or will be, doing some due diligence in connection with a possible purchase.  Some things you need to investigate, among others, are:

1.   Find out if rollback purchases will apply to this land when title changes.  If so, you need to stipulate in your Contract who will be responsible to pay for any applicable rollback taxes.  Your attorney will understand this if you do not.

2.   Make sure that there has never been any toxic or hazardous materials stored or “dumped” on the land.

3.   Make sure you understand how the land is zoned and what uses are allowed or possibly disallowed and if there are any restrictions of record on the property.  Don’t forget to also investigate whether or not there is any application pending for a possible zoning change.

4.   Find out if there is any public water and/or sewer available nearby.

5.   If there is a well and/or septic tank on the property that you plan to use, have them both inspected to make sure they are functioning properly and that any well water is safe for drinking.

6.   Find out if there is any development planned adjacent to or in close proximity to the land that could be objectionable to you.

7.   Is any portion of the 90 acres considered swamp land, or in a flood zone?

8.   If you have not seen a recent survey of the property, you may want to consider having one done prior to closing.  Make sure you walk all the boundaries of the property before you agree to close so that what you “think” you are buying will actually be “what” you are buying.

9.   Make sure any and all easements are disclosed such as power, sewer, storm drains, and any easements to an individual for use of the land or ingress/egress across any portion of it.

10.   Determine if there are any high-tension electrical wires or any underground high-pressure propane or natural gas lines located on this acreage that could potentially pose a hazard.

Good luck to you, and feel free to write again if you have additional questions.

Regards,
Elizabeth