The lift station was full and nobody told me until after closing

Small one, 1.1 acre infill lot in a first ring suburb, zoning already allowed 12 units by right. I paid $310k, closed with a 21 day due diligence window because there were two other offers and I wanted it.

What I did in those 21 days: title, survey, a phase one, a soils report, and a call to the planning department where a nice person confirmed the zoning. What I did not do was write to the utility and ask for a will-serve letter.

Six weeks after closing my civil engineer sends the capacity request in. The lift station serving that basin is at capacity. Anything over about 4 units needs an offsite upgrade. The utility's number for my share of that upgrade was $480k and the queue for the work was roughly 14 months, with no promise the queue held.

Four units does not cover $310k of land in that submarket. I tried the 4 unit version for two months and it came out negative before I paid myself anything.

Sold it eleven months later for $268k to a builder doing two detached houses. Add $41k of architecture and civil, about $9k of carry, taxes and insurance, closing costs both directions. All in I was down about $118k.

What I'd do differently, plainly: the will-serve or capacity letter is a closing condition, same as title. If the seller won't wait for it, I ask for a shorter feasibility period with a bigger nonrefundable deposit and I send the utility request on day one instead of day thirty. Zoning tells you what you may build. Utilities tell you what you can build, and those are separate questions.

2 replies

1aaron_fitz10 Get yoursPRO6

Same shape, different pipe. I had a site under contract where the zoning was fine and the sewer was fine, and the fire marshal wanted 1,500 gpm of fire flow at 20 psi residual. The main on that street was a 6 inch from the sixties and tested at about 900. The fix was 700 feet of new main. I walked during feasibility and I only walked because a builder in that town told me to ask, not because I knew to.

The part that stings in your version is that the planning department answered your call and it was true and useless at the same time. They answer zoning. Nobody in that building is going to volunteer the capacity problem.

0devon_pierce Get yoursPRO5

I'll push back a little on your own diagnosis, quarry. The lift station is what killed the deal, sure. The thing that made the lift station able to kill it was that you went hard on 21 days on a competitive lot with no way out. Any one of five other findings could have landed in the same place, contamination, an easement across the buildable area, a soils report that wants piles.

If your process only survives when nothing surprising turns up, the utility letter is one patch on a bigger hole. I'd rather lose the lot to the other bidder than buy a lot I haven't finished asking questions about. Cost you $118k to learn that, which is on the cheaper end of that particular tuition honestly.

The lift station was full and nobody told me until after closing

2 replies